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MML
MML
MML - Metmar - Audited Financial Results for the year ended 28 February
2007
METMAR LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/007269/06)
Share code: MML ISIN code: ZAE000078747
("Metmar" or "the Company")
Highlights
* Revenue up 30,6%
* Headline earnings per share up 38,6%
* Capital distribution increased by 35%
Audited Financial Results for the year ended 28 February 2007
CONDENSED GROUP INCOME STATEMENTS
Group
Metmar Limited Metmar Trading
(Proprietary)
Limited
Year ended Year ended
28 February 2007 28 February
2006
Audited Audited
(R`000) (R`000)
Revenue 1 634 164 1 250 859
Cost of sales (1 511 579) (1 173 349)
Gross profit 122 585 77 510
Other operating income 14 942 17 922
Operating expenses (56 691) (36 600)
Operating profit 80 836 58 832
Finance costs (14 670) (11 096)
Profit before taxation 66 166 47 736
Taxation (16 747) (14 778)
Net profit for the period 49 419 32 958
Attributable to:
Equity holders of parent 49 062 32 958
Minority interest 357 -
49 419 32 958
CONDENSED GROUP BALANCE SHEETS
Group
Metmar Limited Metmar Trading
(Proprietary)
Limited
28 February 2007 28 February
2006
Audited Audited
(R`000) (R`000)
ASSETS
Non-current assets
Property, plant and 17 678 11 085
equipment
Goodwill 7 269 5 668
Financial assets 3 536 1 558
Deferred taxation 1 077 826
29 560 19 137
Current assets
Inventory 96 406 28 790
Trade and other receivables 185 909 138 602
Cash and cash equivalents 32 880 42 264
315 195 209 656
Total assets 344 755 228 793
EQUITY AND LIABILITIES
Equity capital and reserves 98 647 72 349
Non-current liabilities
Interest bearing borrowings 647 1 051
Financial liabilities 2 736 6 307
3 383 7 358
Current liabilities
Trade and other payables 131 815 96 946
Financial liabilities 268 307
Current tax payable 7 778 7 550
Trade finance facilities 100 056 43 988
Bank overdrafts 2 808 295
242 725 149 086
Total equity and 344 755 228 793
liabilities
Proforma*
Unaudited
Net asset value per share 56,25 41,26
(cents)
Net tangible asset value 52,11 38,02
per share (cents)
Number of shares in issue 175 362 058 175 362 058
(*) For comparative purposes the same number of shares in issue has
been used in this calculation.
CONDENSED GROUP CASH FLOW STATEMENTS
Group
Metmar Limited Metmar Trading
(Proprietary)
Limited
Year ended Year ended
28 February 2007 28 February
2006
Audited Audited
(R`000) (R`000)
Cash flows from operating
activities
Cash generated from 55 130 42 713
operations
Interest received 2 651 2 162
Finance costs (14 670) (11 096)
Taxation (16 975) (9 368)
Net cash from operating 26 136 24 411
activities
Cash flows from investing (10 071) (2 111)
activities
Cash flows from financing
activities
Share issue expenses (5 889) -
Repayment of non-current (1 654) (137)
liabilities
Distributions to (17 535) (14 733)
shareholders
Net cash used in financing (25 078) (14 870)
activities
Total cash movement for the (9 013) 7 430
period
Cash at the beginning of
the period
- Metmar Trading 41 969 34 539
(Proprietary) Limited
- From subsidiaries (2 884) -
acquired
Cash and cash equivalents 30 072 41 969
at the end of the period
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Share Foreign
capital currency
and translation
premium reserve
(R`000) (R`000)
Group
Balance at 1 March 2005 721 670
Currency translation - (670)
differences
Net profit for the period - -
Dividend - -
Adjustment - -
Balance at 28 February 2006 721 -
Share issue expenses - -
Net profit for the period - -
Distribution to shareholders - -
Goodwill arising on business - -
combinations
Revaluation reserve - 44
Currency translation - (472)
differences
Balance at 28 February 2007 721 (428)
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Retained Minority Total
earnings interest equity
(R`000) (R`000) (R`000)
Group
Balance at 1 March 2005 53 357 35 54 783
Currency translation 24 - (646)
differences
Net profit for the period 32 958 - 32 958
Dividend (14 733) - (14 733)
Adjustment - (13) (13)
Balance at 28 February 2006 71 606 22 72 349
Share issue expenses (5 889) - (5 889)
Net profit for the period 49 062 357 49 419
Distribution to shareholders (17 535) - (17 535)
Goodwill arising on business 731 - 731
combinations
Revaluation reserve - - 44
Currency translation - - (472)
differences
Balance at 28 February 2007 97 975 379 98 647
COMMENTARY
PROFILE AND STRUCTURE
The Metmar Group`s main operating company is Metmar Trading (Pty) Limited
("Metmar Trading"), which facilitates trade by importing and exporting bulk
commodities including metals, minerals, ferro alloys, carbon products,
plastics and chemicals.
On 8 May 2006, Metmar Trading was reversed into a dormant JSE-listed shell,
Heritage Collection Holdings Limited, the name of which was changed to
Metmar Limited.
Simultaneously, Metmar acquired a manufacturing company, Matrix Metals
(Pty) Limited (69,1% owned), together with two property companies, Metmar
Properties (Pty) Limited (100% owned) and Hornet Properties (Pty) Limited
(90% owned), which house the Group`s main office and its manufacturing
plants.
The Group`s financial results for the year ended 28 February 2007 include
those of the Company, together with all its subsidiaries from their
respective dates of acquisition.
FINANCIAL PERFORMANCE
It is pleasing to report that in its first year as a listed company Metmar
has shown excellent financial results. Revenue increased by 30,6% from R1
250 million to R1 634 million and operating profit increased by 37,3% from
R59 million to R81 million. Headline earnings per ordinary share increased
by 38,6% from 18,22 cents to 25,25 cents.
Cash flow from operating activities was R26 million compared to R70 million
in 2006, this reduction mainly resulting from an additional R60 million
being absorbed by working capital due to an increase in trading activities
towards year end. Shortly after year end, with the completion of trades,
working capital was reduced by an approximate R83 million cash inflow.
After taking into account the cash flows from investing and financing
activities, cash and cash equivalents at 28 February 2007 were R30 million
(2006: R42 million).
OPERATIONAL PERFORMANCE
The past year saw the global commodities sector enjoying buoyant market
conditions. Record prices were underpinned by solid economic growth,
particularly in the emerging economies.
Our core trading activities performed well with sales volumes increasing
across most products. This has resulted in an increased requirement for
bank finance facilities and our principal trade finance bankers have been
very supportive.
The lead recycling and anode manufacturing plant showed positive results
whilst our plastics recycling operation was subjected to upgrades in the
washing and materials handling areas which reduced profitability for the
current year.
STRATEGIC EQUITY STAKES TO SECURE PRODUCTS
Kalahari Resources (Pty) Limited, a manganese mining company in which
Metmar has a 10% stake, completed its pre-feasibility study during November
2006. The drilling of ten exploration holes has shown reserves of
approximately 39 million tons of ore with a 38,9% manganese average
content. It is expected to complete the bankable feasibility study by the
end of 2007.
During the year Metmar acquired an effective 5% interest in Kivu Resources
Limited with an option to increase the stake to 7%. The Kivu Resources
project holds tin, tantalum and tungsten ore concessions in the eastern
Democratic Republic of the Congo and Rwanda, with exploration in progress.
Subsequent to the year end Metmar acquired for cash an effective 8,9%
interest in Mogale Alloys (Pty) Limited ("Mogale Alloys") at a cost of R36
million. Mogale Alloys is a manganese and stainless steel alloy producer
based in Mogale (Krugersdorp). The investment was funded by the issue of 10
million Metmar ordinary shares.
BLACK ECONOMIC EMPOWERMENT
Discussions continue with the two BEE groups, namely Ehlobo Holdings (Pty)
Limited and Msemu Trust and we expect to successfully conclude these
transactions during the current financial year.
Progress has been made in addressing the other related aspects of the
Empowerment Code.
PROSPECTS
With the continued growth in the emerging economies, especially China,
India and Africa and robust underlying demand, the directors are
anticipating a strong year ahead.
DISTRIBUTION TO SHAREHOLDERS
The directors are pleased to advise that the Company will be making a
distribution out of the share premium account of 13,5 cents per ordinary
share ("the distribution") compared to a distribution of 10 cents per
ordinary share in July 2006. Further details are set out below.
The distribution is being implemented in terms of the general authority to
make payments to shareholders granted to directors at the annual general
meeting held on 23 August 2006.
The important dates relating to the distribution are set out below:
Last day to trade in order to Friday, 15 June 2007
participate in the distribution
Metmar shares commence trading "ex" Monday, 18 June 2007
the distribution
Record date for the distribution Friday, 22 June 2007
Payment date for the distribution Monday, 25 June 2007
Metmar share certificates may not be dematerialised or remateralised
between Monday, 18 June 2007 and Friday, 22 June 2007, both dates
inclusive.
The unaudited pro forma financial effects of the distribution, which are
the responsibility of the directors of Metmar, are set out below. The
distribution will not have a significant effect on earnings, headline
earnings, net asset value and tangible net asset value as far as a Metmar
shareholder is concerned.
Before the Proposed After the
distribution distribution distribution
R`0001 R`000 R`0002
Assets
Cash and cash equivalents 32 880 (25 024) 7 856
Equity and liabilities
Equity attributable to 98 647 (25 024) 73 623
shareholders
Notes:
1. These figures have been extracted from the audited financial
results of the Company for the year ended 28 February 2007.
2. The adjustments to cash and cash equivalents and equity
attributable to shareholders were made on the assumption that the
distribution was paid on 28 February 2007.
NOTES TO THE AUDITED FINANCIAL RESULTS
1. Basis of preparation
The audited consolidated financial results have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), the South
African Companies Act, as amended and the JSE Listings Requirements. The
principal accounting policies used in the preparation of the financial
results for the year ended 28 February 2007 are consistent with those
applied for the year ended 28 February 2006. The audited financial results
of Metmar represent the continuation of the statements of the legal
subsidiary, Metmar Trading, per Appendix B of IFRS 3 - Business
Combinations. Comparative results are the audited consolidated financial
statements of Metmar Trading for the year ended 28 February 2006.
2. Reconciliation between earnings and headline earnings
Metmar Limited Metmar Trading
(Proprietary)
Limited
28 February 28 February
2007 2006
Audited Audited
(R`000) (R`000)
Profit for the period 49 062 32 958
Adjustments for:
- (Profit) loss on disposal (8) 204
of property, plant and
equipment after taxation
- Loans written back - (1 214)
- Fair value adjustments (381) -
- Redeemable preference (4 387) -
shares cancelled
Headline earnings 44 286 31 948
Proforma*
Unaudited
Earnings per share (cents)
- Headline 25,3 18,2
- Basic 28,0 18,8
Weighted average number of 175 362 058 175 362 058
shares in issue
* For comparative purposes the same weighted average number of shares
in issue has been used in this calculation.
3. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and
other short-term highly liquid investments that are readily convertible to
a known amount of cash.
4. Related party transactions
During the period, the Company and its subsidiaries, in the ordinary course
of business, entered into various transactions with their associates. These
transactions were subject to terms that were no less favourable than those
arranged with third parties.
5. Corporate governance
The Metmar Group complies with the code of Corporate Practice and Conduct
published in the King II Report on Corporate Governance.
6. Annual general meeting
The Company`s annual general meeting of shareholders will be held at
Metmar`s registered office, 24 Sloane Street, Bryanston on Wednesday, 22
August 2007 at 09h30.
Leslie Boyd David J Ellwood
Non-executive Chairman Chief Executive Officer
21 May 2007
Directors
L Boyd* (Chairman), D J Ellwood (Chief Executive Officer),
P P Boshoff, C B Brayshaw*, G R Forsdyke, G P Lotis,
D Mashile-Nkosi*, A P Ruiters*, M F de Wet (Alt)
* Non-executive
Company Secretary
M R D Boyns (British)
Registered office
24 Sloane Street, Bryanston, 2191
(PO Box 98549, Sloane Park, 2152)
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
(PO Box 61051, Marshalltown, 2107)
Sponsor
BDO QuestCo (Pty) Limited
Auditors
Grant Thornton
These results may be viewed on the internet on http://www.metmarlimited.com
Date: 22/05/2007 14:00:00 Produced by the JSE SENS Department.
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