| Tue 21 Aug 2007, 7:50 | | MTA - Metair Investments - Interim report for the |
|
MTA
MTA
MTA - Metair Investments - Interim report for the six months ended 30 June 2007
METAIR INVESTMENTS LTD
Reg no: 1948/031013/06
Share code: MTA
ISIN: ZAE000090692
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2007
Key features
- Revenue increased by 23.9% to R1 494 million (2006: R1 205 million)
- Gross profit increased by 17.8% to R320 million (2006: R272 million)
- Attributable profit after tax increased by 25.1% to R110 million (2006: R88
million)
- HEPS increased by 35.2% to 78 cents (2006: 58 cents)
- Adjusted HEPS increased by 24.3% to 72 cents (2006: 58 cents)
Theo Loock MD Metair commented: "We managed to maintain the volume growth
momentum from the second half of last year. External cost pressures and the lead
price in particular, impacted on our margin. The second half of this year will
be extremely challenging as two high volume locally produced vehicles are being
replaced and new replacement models still need to be launched. Full production
volume is only expected to be reached when vehicle exports start in January
2008."
Shareholders and other interested parties are invited to join a conference call
hosted by Metair management at 9am today (21 August 2007).
The dial-in number is 011 535 3600 (ask to join the Metair call).
Enquiries
Metair Investments 011 646 3011
Theo Loock, MD 082 900 1376
Callie van der Merwe, FD 082 926 9195
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Jacques de Bie 082 691 5384
Interim Report for the 6 months ended 30 June 2007
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2007 2006 2006
R`000 % R`000 R`000
Unaudited Change Unaudited Audited
Revenue 1 493 699 23,9 1 205 375 2 641 911
Cost of sales (1 173 623) (25,7) (933 615) (2 050 455)
Gross profit 320 076 17,8 271 760 591 456
Other operating income 21 297 143,0 8 763 30 142
Distribution, (158 170) (11,0) (142 439) (310 361)
administrative and other
expenses
Operating profit 183 203 32,7 138 084 311 237
Fair value adjustments on 116
financial instruments
Finance 2 308 7,2 2 153 6 594
Interest expense for the (2 396)
Metair Share Incentive
Trust
Share of results of 5 466 37,8 3 966 7 100
associates
Profit before tax 188 581 30,7 144 319 324 931
Income tax expense (63 498) (34,3) (47 273) (98 388)
Profit for the period 125 083 28,9 97 046 226 543
Attributable to:
Equity holders of the 110 357 25,1 88 182 203 240
company
Minority interest 14 726 66,1 8 864 23 303
125 083 28,9 97 046 226 543
Depreciation and (33 466) (28,4) (26 067) (54 562)
amortisation
Reconciliation
Earnings per share for
profit attributable to the
equity holders of the
company (cents)
Basic earnings per share 78 32,6 59 134
Profit on disposal of (1) (1)
interest in subsidiary
Headline earnings per 78 35,2 58 133
share
Adjusted headline earnings
adjustments per share
(cents)
Headline earnings per 72 24,3 58 133
share
Interest expense for The 2
Metair Share Incentive
Trust
Adjusted headline earnings 74 27,0 58 133
per share
Diluted earnings per share
(cents)
Basic earnings per share 72 24,1 58 133
Headline earnings per 73 28,1 57 132
share
Dividend per share (cents) 40 34 34
Number of shares in issue 152 532 151 645 151 645
(`000)excluding treasury
shares
Weighted number of 141 905 150 350 151 250
ordinary shares in issue
(`000)
Adjustment for dilution 1 597 1 725 1 975
due to share options
(`000)
Adjustment for treasury 10 000
shares (`000)
Weighted number of 153 502 152 075 153 225
ordinary shares in issue
used for dilution
calculation and adjusted
headline earnings
calculation (`000)
GROUP CASH FLOW STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Unaudited Unaudited Audited
Operating activities
Profit before taxation 188 581 144 319 324 931
Non-cash items 38 853 41 944 37 247
Working capital changes 255 (64 072) (119 915)
Cash generated from operations 227 689 122 191 242 263
Finance charges (16 723) (8 868) (6 846)
Investment income 16 635 11 021 13 440
Taxation paid (37 973) (44 336) (89 857)
Dividends paid (66 703) (57 055) (57 055)
Dividend income from associate 416 416
Net cash inflow from operating 122 925 23 369 102 361
activities
Investing activities
Proceeds on disposal of 20 080 20 080
interest in subsidiary
Net cash used in other (52 085) (92 974) (165 065)
investing activities
Net cash outflow from (52 085) (72 894) (144 985)
investing activities
Net cash inflow/(outflow) from 92 965 17 847 (147 868)
financing activities
Net increase/(decrease) in 163 805 (31 678) (190 492)
cash and cash equivalents
Cash and cash equivalents at 38 050 228 542 228 542
beginning of period
Cash and cash equivalents at 201 855 196 864 38 050
end of period
STATEMENT OF RECOGNISED INCOME AND EXPENSE
Six months ended Year ended
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Unaudited Unaudited Audited
Actuarial gains and losses
recognised directly in equity
Gross (745) (523) (745)
Deferred tax 216 152 216
Net expense recognised directly (529) (371) (529)
in equity
Profit for the year 125 083 97 046 226 543
Total recognised income for the 124 554 96 675 226 014
year
Attributable to:
Equity holders of the company 109 853 87 836 202 553
Minority interest 14 701 8 839 23 461
124 554 96 675 226 014
GROUP BALANCE SHEETS
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 631 303 546 027 614 087
Intangible assets 15 117 12 746 14 647
Investments in associate 26 264 16 392 19 548
companies
Defined benefit asset 507 1 640
Deferred taxation 10 598 1 475 10 759
Other non-current assets 35 000 39 464 36 250
718 789 616 104 696 931
Current assets
Inventories 423 795 321 361 423 007
Receivables and prepayments 366 686 324 988 345 499
Other financial assets at fair 43 383
value
Cash and cash equivalents 249 002 161 783 67 810
1 039 483 851 515 836 316
Total assets 1 758 272 1 467 619 1 533 247
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 42 876 40 555 40 555
Treasury shares (101 876) (1 509) (101 508)
Share-based payment reserve 2 905 2 191 2 551
Non-distributable reserves 23 929 13 599 16 755
Retained earnings 1 090 659 928 510 1 039 954
Ordinary shareholders` equity 1 058 493 983 346 998 307
Minority interest 83 230 64 436 79 055
Total equity 1 141 723 1 047 782 1 077 362
Non-current liabilities
Interest bearing borrowings 2 319 43 099 5 069
Post-employment medical benefits 15 679 15 134 15 228
Deferred taxation 75 193 52 125 68 780
Other non-current liabilities 100 000
193 191 110 358 89 077
Current liabilities
Trade and other payables 321 687 260 309 299 335
Borrowings 5 889 16 268 13 052
Taxation 29 907 12 392 9 092
Provisions for liabilities and 18 728 12 208 15 569
charges
Bank overdrafts 47 147 8 302 29 760
423 358 309 479 366 808
Total liabilities 616 549 419 837 455 885
Total equity and liabilities 1 758 272 1 467 619 1 533 247
Net asset value per share 749 691 710
(cents)
Capital expenditure 50 355 67 904 170 267
Capital commitments
- contracted 68 030 63 530 54 918
- authorised but not contracted 18 964 53 012 30 565
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
Accounting policies
These consolidated condensed interim financial statements are prepared in
accordance with IAS34, Interim Financial Reporting. The accounting policies used
in the preparation of the interim financial statements are consistent with those
used in the annual financial statements for the year ended 31 December 2006.
Adjusted headline earnings
The Group has decided to present "adjusted headline earnings" to assist users of
the Group`s financial statements to better interpret the operating performance
of the Group for the period under review. Adjusted headline earnings exclude
certain items of income or expense so as to enable users to obtain a more
meaningful comparison of the Group`s performance with prior periods. These
adjustments include material items considered to be outside of the normal
operating activities of the Group and/or of a non-recurring nature. Certain
aspects of the commentary included in the chairman and managing director`s
review of operating results, as indicated in these reviews, have been based on
the adjusted headline earnings information.
Contingencies
The bank and other guarantees given by the Group to third parties amounted to
R80,7 million as at 30 June 2007 (R40,7 million as at 30 June 2006).
Borrowings 30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Current 5 889 16 268 13 052
Non-current 2 319 43 099 5 069
Total 8 208 59 367 18 121
The movement in the borrowings
can be analysed as follows:
Six months ended June 2007
Opening amount (18 121)
Repayments 12 482
Amounts raised (2 569)
Closing amount (8 208)
COMMENTS
Nature of operations
Metair has been listed since 1948. Metair comprises of 7 operating subsidiaries
and 2 associate companies that manufacture and distribute products predominantly
for the automotive industry. Products manufactured include heating and cooling
systems, shock absorbers, springs, lead batteries, lighting and signalling
devices, plastic mouldings, front end modules, wiring harnesses, electric motors
and automotive cables. Products are supplied to South African assemblers of new
vehicles (OEM`s), the replacement market and a proportion of output is exported.
Results
Management believes that adjusted earnings per share are a more accurate
reflection of the performance of the Group than headline earnings per share as
per the notes to the financial statements. Adjustments for the period under
review were made by deconsolidating the Metair Share Incentive Trust from the
headline earnings. Adjusted headline earnings per share for the period were 74
cents compared to 58 cents achieved in the comparable period. This represents an
increase of 27,0%. Profit after tax attributable to ordinary shareholders
increased adjusted to R112,5 million and unadjusted to R110,4 million from R88,1
million.
Group turnover increased by 23,9% compared to the first six months of 2006.
Gross profit for the period was only up 17,8% as commodity prices, especially
lead, continued to rise. Working capital was well controlled during the period
and is in line with increased turnover, increased commodity prices and the stock
buildup that took place to facilitate trial runs for new models.
Cash generated from operations was R228 million compared to R122 million in the
comparable period - an increase of 86%. Net cash on hand increased from R20
million at year end to R194 million. R100 million of cash that was used to
temporarily fund the management participation share structure was released
during the period. Interest received as included in finance marginally increased
to R2,308 million in the period. The consolidation of the Metair Share Incentive
Trust brought about an interest expense of R2,396 million, it is this expense
that is excluded in the adjusted earnings.
Corporate activity after 30 June 2007
During July 2007 Smiths Plastics, a wholly owned subsidiary of Metair, acquired,
subject to Competition Board approval, Automould. Automould is a manufacturer of
plastic components used in the automotive industry. The acquisition of Automould
is consistent with the Group`s strategy of adding to the economies of scale of
its underlying businesses. The size of the transaction is less than required for
a category 3 transaction as described in the JSE Limited Listings Requirements
and therefore requires no further disclosure.
Review of operations
Capital expenditure of R50,3 million was incurred during the period under
review. Further capital expenditure to the amount of R87,0 million has also been
committed. As a consequence of the significant investment in capital over the
past few years, the Group is well positioned to support its customers in their
expansion plans.
As stated at year-end the Group`s objective is to improve on its global
competitiveness in 2007 by resetting the cost base to be in line with
competitive component manufacturers in developing countries. Costs have been
well controlled. The group will continue to focus on costs, quality, safety and
delivery.
Directorate
During the period Mrs Elisabeth Bradley and Mr Gerrit Strydom resigned from the
board, Mr Mpueleng Pooe was appointed as the non-executive chairman and Mr
Bothata Molotlegi (Alternate: Mr Lucas Ndala) was appointed as a non-executive
director.
Prospects
Industry
The overall prospects for the automotive industry remain positive. Industry
automotive production is projected to reach 592 150 vehicles in 2007 compared to
2006 domestic production of 587 719 vehicles. During 2007 an estimated 33
percent of the production is expected to be exported. Forecast production in
2008 is projected at 655 700 vehicles. Local demand softened towards the end of
the current reporting period as a consequence of higher interest rates and the
roll out of The National Credit Act. Local demand is expected to be soft for the
balance of the financial year.
The motor industry still awaits the final announcement from government regarding
its review of the Motor Industry Development Programme (MIDP). Metair remains
positive in its expectation regarding both the extension of the programme and
its refocus on locally produced components. The latest indication from
government is that an announcement will be made by December 2007.
Metair
The second half of the 2007 financial year will be extremely challenging as two
high volume locally produced vehicles are being replaced and new replacement
models still need to be launched. The projected production ramp up during this
period is expected to be slow and full production volume is only expected to be
reached when vehicle exports start in January 2008. Therefore performance in the
second half of the financial year will not match the first half.
The exchange rate remains an important factor in terms of overall
competitiveness and profitability of the Group.
Appreciation
The Group would like to express its sincere appreciation for the contribution of
Elisabeth Bradley and Gerrit Strydom over the years. Elisabeth Bradley and the
Wessels family`s association with the Group extended over more than 30 years and
we will remain inspired by their vision and dedication.
Signed on behalf of the board
O M E Pooe - Chairman C T Loock - Managing Director
Johannesburg, 20 August 2007
REGISTRARS
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
JOHANNESBURG
2001
SPONSOR
Ernst & Young Sponsors (Pty) Limited
EXECUTIVE DIRECTORS: C T Loock (Managing); C I J van der Merwe (Finance)
NON-EXECUTIVE DIRECTORS: O M E Pooe (Chairman); A Joffe; B Molotlegi (Alternate:
L M Ndala); A D Plummer*; G M C Ryan
INDEPENDENT NON-EXECUTIVE DIRECTORS: R S Broadley; L Soanes*
COMPANY SECRETARY: S M Vermaak
*British
Date: 21/08/2007 07:50:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
