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MTA
MTA
MTA - Metair Investments - Abridged Audited Results For The Year Ended
31 December 2007 and dividend declaration
METAIR INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Reg. No. 1948/031013/06)
JSE code: MTA
ISIN: ZAE000090692
Abridged Audited Results for the year ended 31 December 2007
ABRIDGED GROUP INCOME STATEMENTS
31 December 31 December
2007 2006
R`000 R`000
Revenue 2 984 293 2 641 911
Cost of sales (2 391 410) (2 043 704)
Gross profit 592 883 598 207
Other operating income 33 030 30 064
Distribution, administrative and (344 249) (317 034)
other expenses
Operating profit 281 664 311 237
Interest income 14 175 13 440
Interest expense (17 038) (6 846)
Share of results of associates 8 384 7 100
Profit before taxation 287 185 324 931
Taxation (92 175) (98 388)
Profit for the year 195 010 226 543
Attributable to:
Equity holders of the company 174 509 203 240
Minority interest 20 501 23 303
195 010 226 543
Depreciation and amortisation 73 650 54 562
Earnings per share (cents)
Basic earnings per share 123 134
(Profit)/loss on disposal of 1 1
property, plant and equipment
Profit on disposal of investment (2)
Headline earnings per share 124 133
Diluted earnings per share (cents)
Basic earnings per share 120 133
Headline earnings per share 121 132
Dividend per share (cents) 40 34
Number of ordinary shares in issue 152 532 151 645
(`000)
Weighted average number of 142 085 151 250
ordinary shares in issue (`000)
Adjustment for dilution due to 1 597 1 975
share options (`000)
Treasury shares held by the Metair 10 000
Share Incentive Trust (`000)
Weighted average number of 153 682 153 225
ordinary shares in issue used for
dilution calculation (`000)
Adjusted headline earnings per
share (cents)
Adjusted headline earnings per 121
share
Headline earnings 176 351
Interest expense for the Metair 7 182
Share Incentive Trust
Adjusted headline earnings 183 533
Weighted average number of 142 085
ordinary shares in issue (`000)
Treasury shares held by the Metair 10 000
Share Incentive Trust (`000)
Weighted average number of 152 085
ordinary shares in issue used for
adjusted headline earnings
calculation (`000)
ABRIDGED GROUP CASH FLOW STATEMENTS
31 December 31 December
2007 2006
R`000 R`000
Operating activities
Profit before taxation 287 185 324 931
Non-cash items 71 106 37 247
Working capital changes (118 096) (119 915)
Cash generated from operations 240 195 242 263
Finance charges (17 038) (6 846)
Taxation paid (93 702) (89 857)
Dividends paid (68 983) (57 055)
Dividend income from associate 6 860 416
Net cash inflow from operating 67 332 88 921
activities
Investing activities
Proceeds on disposal of interest 20 080
in subsidiary
Net cash utilised in other (123 168) (151 625)
investing activities
Net cash outflow from investing (123 168) (131 545)
activities
Finance activities
Net cash inflow/(outflow) from 59 107 (147 868)
financing activities
Net increase/(decrease) in cash 3 271 (190 492)
and cash equivalents
At beginning of the year 38 050 228 542
Cash and cash equivalents at end 41 321 38 050
of year
ABRIDGED CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
31 December 31 December 2006
2007 R`000
R`000
Actuarial gains and losses 14 161 (529)
recognised directly in equity
Gross 19 945 (745)
Deferred tax (5 784) 216
Net income/(expense) recognised 14 161 (529)
directly in equity
Profit for the year 195 010 226 543
Total recognised income for the 209 171 226 014
year
Attributable to:
Equity holders of the company 186 646 202 553
Minority interest 22 525 23 461
209 171 226 014
ABRIDGED GROUP BALANCE SHEETS
31 December 31 December 2006
2007
R`000 R`000
ASSETS
Non-current assets 827 404 696 931
Property, plant and equipment 702 417 614 087
Intangible assets 49 093 14 647
Investment in associates 22 352 19 548
Defined benefit asset 21 016 1 640
Deferred taxation 32 526 10 759
Other non-current assets 36 250
Current assets 1 079 221 836 316
Inventory 608 243 423 007
Accounts receivable 355 586 344 724
Cash and cash equivalents 114 852 67 810
Derivative financial assets 540 775
Total assets 1 906 625 1 533 247
EQUITY AND LIABILITIES
Capital and reserves 1 100 837 998 307
Share capital and premium 42 876 40 555
Share-based payment reserve 3 074 2 551
Treasury shares (131 813) (101 508)
Non-distributable reserves 25 139 16 755
Retained earnings 1 161 561 1 039 954
Ordinary shareholders equity 1 100 837 998 307
Minority interest 89 295 79 055
Total equity 1 190 132 1 077 362
Non-current liabilities 242 048 89 077
Interest bearing borrowings 15 161 5 069
Cumulative redeemable preference 100 000
shares in respect of Metair Share
Incentive Trust
Post-employment medical benefits 16 758 15 228
Deferred taxation 110 129 68 780
Current liabilities 474 445 366 808
Trade and other payables 357 063 299 228
Borrowings 11 965 13 052
Taxation 4 832 9 092
Provisions for liabilities and 27 054 15 569
charges
Derivative financial liability 107
Bank overdrafts 73 531 29 760
Total liabilities 716 493 455 885
Total equity and liabilities 1 906 625 1 533 247
Net asset value per share (cents) 780 710
Capital expenditure 129 691 166 275
Capital commitments
- contracted 31 512 54 918
- authorised but not contracted 43 735 30 565
NOTES TO THE CONSOLIDATED ABRIDGED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The condensed abridged financial information has been prepared in accordance
with the recognition and measurement criteria of all applicable statements and
interpretations of International Financial Reporting Standards ("IFRS") and is
presented in terms of the disclosure requirements set out in IAS 34 - Interim
Financial Reporting. The accounting policies applied to the condensed abridged
financial information are consistent with those as set out in the annual
financial statements for the year ended 31 December 2006.
CONTINGENCIES
The bank and other guarantees given by the group to third parties amounted to
R7,4 million as at 31 December 2007 (R9,6 million as at 31 December 2006).
31 December 2007 31 December 2006
Borrowings R`000 R`000
Current 11 965 13 052
Non-current 115 161 5 069
127 126 18 121
The movement in the borrowings can be analysed as follows:
Year ended December 2007
Opening amount (18 121)
Repayments 13 053
Amounts raised (122 058)
Closing amount (127 126)
31 December 2007 31 December 2006
Fair value adjustments on R`000 R`000
financial instruments
Forward foreign exchange 540 668
contracts - fair value hedges
Total 540 668
ANNUAL GENERAL MEETINGThe annual report will be mailed to shareholders by 31
March 2008 along with the notice of annual general meeting. The annual general
meeting will be held on 2 May 2008 at 14h00 at Metair Investments Limited, 10
Anerley Road, Parktown, Johannesburg
AUDITORS` REPORTThe abridged results of the group as set out above have been
audited by the group`s auditors, PricewaterhouseCoopers Inc. Their report is
available for inspection at the company`s registered office (address details as
above).
COMMENTS
NATURE OF OPERATIONSThe Metair Group comprises of seven operating subsidiaries
and two 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 and front end modules. Products are
supplied to South African assemblers of new vehicles (OEM`s), the replacement
market and a proportion of output is exported.
RESULTSAdjusted headline earnings per share for the full year to December 2007
was 121 cents compared to 133 cents achieved in the previous financial year.
This represents a 9% decline in adjusted headline earnings. This decline can be
attributed to the decline in the number of locally produced vehicles and the
loss of 10 production days in September due to labour action.
Group turnover increased by 13% to R2 984 million compared to R2 642 million in
2006. Adjusted profit after tax attributable to ordinary shareholders decreased
to R183,5 million from R200,7 million and operating profit declined to R281
million from R311 million in 2006. Cash generated from operations was R240
million compared to R242 million in 2006.
Working capital increased by R118 million when compared to December 2006. The
combination of the trading days lost due to industrial action and high commodity
prices increased the value of stock on hand. Debtors increased due to extended
production during the December shutdown period as customers tried to claw back
some of the lost production experienced during the September labour disruptions.
A dividend of 40 cents per share has been declared in respect of 2007. This is
on par with the 40 cents dividend declared in 2006 and paid in 2007.
INDUSTRY REVIEW2007 was the first year since 2002 where there was an annual
decline in the total number of vehicles sold in South Africa. The total number
of vehicles excluding medium and light commercial vehicles sold was 639 039
which is 6,2% less than the 681 235 sold in 2006. The concerning fact is the
number of completely imported vehicles being sold in the South African market.
The import percentage of cars sold increased to 61% in 2007 and light commercial
vehicles to 23,4% placing the overall percentage at 49% or 312 855 vehicles.
This is 142 268 vehicles more than what is exported and puts tremendous strain
on the country`s current account.
The group is more affected by the number of vehicles produced in South Africa
both for the domestic and export market than what is sold domestically. The
total number of vehicles produced in South Africa declined by 10,34% to 496 771
vehicles in 2007 compared to the 554 100 vehicles produced in 2006.
The Motor Industry Development Program (MIDP) is currently under review. The
Industry has been invited to make submissions and Government have set up a
formal structure to consult with Industry in this regard. Metair will make a
submission and will also play a role in the preparation of the Industry
submission under the auspices of the National Association of Automotive
Component and Allied Manufacturers. It is anticipated that an announcement
regarding the revised program will be made in the latter part of 2008.
Government has given the Industry the undertaking that the current program will
continue until 2012 and that the detailed aspects of the new program will be
announced and promulgated between 2009 and 2012. Metair remains optimistic that
the revised program will have a positive impact for local component
manufacturers as the focus of the future program is expected to shift to local
content and increased high volume vehicles exports.
REVIEW OF OPERATIONSThe prolonged industrial action that resulted in a loss of
10 production days during the month of September had a detrimental effect on the
company`s results for the second half of the year. These labour disruptions came
at the worst possible time for Metair as it coincided with Toyota South Africa`s
launch of the new Corolla and the first phase of production volume ramp up.
Smiths Plastics, which supplies plastic and styling painted plastic products to
Toyota, was in particular negatively affected.
Capital expenditure of R130 million (2006: R166 million) was incurred during the
period under review. This expenditure will facilitate the increase in export
volumes especially for the Toyota Corolla European export in 2008.
Quality, cost and supply requirements will continue to become more stringent
through 2008 and 2009 as more sophisticated export markets are entered into.
ELECTRICITY Fortunately, Metair has to date not been directly affected by the
shortages of electricity experienced in South Africa. The group purchases its
electricity from local councils and the councils have not been interrupting
power supply to industrial sites. The group could be affected if the electricity
shortage was to escalate and a need arises to apply wider power supply
interruptions. The interruptions of the power supply by Eskom directly to mining
customers and the 10% demand saving requirement is of concern to the group as it
may have an impact on the supply of copper and other strategic materials in the
future.
Metair is committed to reducing electricity demand and has used innovative
automotive technology to design and industrialise an energy efficient street
light. The power shortage in South Africa also presents opportunities for First
National Batteries to expand its product offering in support of the renewable
energy focus.
BLACK ECONOMIC EMPOWERMENTDuring 2007 Metair made meaningful progress towards
compliance with the Broad Based Black Economic Empowerment requirements in South
Africa by way of the introduction of Royal Bafokeng Holdings as a strategic
shareholder.
At the end of the period, the total Black shareholding in Metair was 39,27%.
Other aspects of the scorecards continue to be addressed.
PROSPECTS
IndustryThe overall vehicle production outlook for 2008 and 2009 remains
positive especially on the back of increased export volumes planned by Toyota
South Africa for 2008 and 2009. The introduction of a locally produced Renault
vehicle is also planned for 2009 offering production opportunities to some of
the group`s subsidiaries.
The announcement from Ford South Africa regarding the production of a high
volume light commercial vehicle from 2011 could offer additional opportunities
for the group. This announcement also seems to highlight Ford South Africa`s
confidence in Government`s future commitment to continue the MIDP Program after
2012.
Component manufacturers continued to be subjected to cost competitiveness from
developing countries such as Thailand and Brazil as high volume export vehicles
are launched in South Africa.
GroupThe Metair group is fortunate that all of its subsidiaries will participate
in the increase in OEM production volumes in 2008 and 2009 especially those
planned by Toyota South Africa. The number of vehicles to be produced by all of
the manufacturers in 2008 is expected to increase by 18,64% from 496 771
vehicles in 2007 to 589 300 vehicles. The planned increase of 92 529 vehicles is
mostly for the export market which is projected to increase to 284 300 vehicles
from the 170 587 exported in 2006. Although new business was obtained under much
tighter competitive and price target conditions resulting in the reduction in
overall gross margin, the anticipated increase in volumes across the Metair
Group is expected to result in an improved financial performance in 2008.
The group remains sensitive to its customers` ability to produce vehicles at
forecast volumes and their successful entry into the new export markets.
The exchange rate, particularly the Rand/Dollar rate, remains a determining
factor in terms of the overall competitiveness and profitability of the group.
APPRECIATIONThe group would like to express our sincere appreciation for the
years of service and contribution from Elisabeth Bradley and Gerrit Strydom.
Employees and management are thanked for their continued efforts during 2007.
Signed on behalf of the board
O M E Pooe - Chairman
C T Loock - Managing Director
Johannesburg, 13 March 2008
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited70 Marshall StreetJohannesburg
2001
SPONSORErnst & Young
Wanderers Office Park
52 Corlett Drive
Illovo 2116
EXECUTIVE DIRECTORS:
C T Loock (Managing); C I J van der Merwe (Finance)
NON-EXECUTIVE DIRECTORS: O M E Pooe (Chairman); A D Plummer*; A Joffe; GMC
Ryan; B MolotlegiINDEPENDENT NON-EXECUTIVE DIRECTORS: R S Broadley; L Soanes*
COMPANY SECRETARY: S M Vermaak
*British
METAIR INVESTMENTS LIMITED
Reg No. 1948/031013/06
JSE code: MTA
ISIN: ZAE000090692
(Incorporated in the Republic of South Africa)
DECLARATION OF ORDINARY DIVIDEND NO 58
NOTICE IS HEREBY GIVEN that a final ordinary dividend of 40 cents per ordinary
share has been declared in respect of the year ended 31 December 2007. The last
date to trade cum dividend will be Friday 4 April 2008. Trading will commence ex
dividend from Monday 7 April 2008 and the record date will be Friday 11 April
2008. The date of payment will be Monday 14 April 2008.
Share certificates may not be dematerialised or rematerialised between Monday 7
April 2008 and Friday 11 April 2008, both days inclusive.
The audited consolidated profit before taxation of the company and its
subsidiaries for the year ended 31 December 2007 amounts to R287 185 000 from
which source this dividend will be fully funded.
By order of the board
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001
REGISTERED OFFICE
10 Anerley Road
Parktown
2193
17 March 2008
Date: 17/03/2008 17:04:47 Produced by the JSE SENS Department.
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