| Mon 23 Mar 2009, 7:05 | | MTA - Metair - Abridged audited results for the year ended 31 December 2008 and |
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MTA
MTA
MTA - Metair - Abridged audited results for the year ended 31 December 2008 and
notice of annual general meeting
METAIR INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("Metair" or "the group")
Registration Number 1948/031013/06
Share code: MTA
ISIN code: ZAE000090692
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008 AND NOTICE OF
ANNUAL GENERAL MEETING
ABRIDGED GROUP INCOME STATEMENTS
31 December 31 December
2008 2007
R`000 R`000
Revenue 4 180 398 2 984 293
Cost of sales (3 496 203) (2 391 410)
Gross profit 684 195 592 883
Other operating income 45 139 33 030
Impairment of assets (122 590) -
Distribution, administrative and other expenses (512 405) (344 249)
Operating profit 94 339 281 664
Interest income 14 767 14 175
Interest expense (51 385) (17 038)
Share of results of associates 17 056 8 384
Profit before taxation 74 777 287 185
Taxation (71 859) (92 175)
Profit for the year 2 918 195 010
Attributable to:
Equity holders of the Company (13 080) 174 509
Minority interest 15 998 20 501
2 918 195 010
Depreciation and amortisation 109 557 73 650
Earnings per share (cents)
Basic earnings per share (9) 123
(Profit)/loss on disposal of property,
plant and equipment (2) 1
Impairment charge 86 -
Tax effect (1) -
Headline earnings per share 74 124
Diluted earnings per share (cents)
Basic earnings per share (9) 120
Headline earnings per share 74 121
Dividend per share (cents) 40 40
Number of ordinary shares in issue (`000) 152 532 152 532
Weighted average number of ordinary shares in issue (`000)
141 707 142 085
Adjustment for dilution due to share options (`000)
1 597
Treasury shares held by The Metair Share Incentive Trust (`000)
10 000
Weighted average number of ordinary shares in issue used for dilution
calculation (`000) 141 707 153 682
No diluted earnings per share is reflected for 2008 as share options and
potential ordinary shares issued or convertible in terms of the various share
incentive schemes are anti-dilutive.
ABRIDGED GROUP CASH FLOW STATEMENTS 31 December 31 December
2008 2009
R`000 R`000
Operating activities
Profit before taxation 74 777 287 185
Non-cash items 251 762 71 106
Working capital changes 42 267 (118 096)
Cash generated from operations 368 806 240 195
Finance charges (51 385) (17 038)
Taxation paid (96 970) (93 702)
Dividends paid (65 089) (68 983)
Dividend income from associate - 6 860
Net cash inflow from operating activities 155 362 67 332
Investing activities
Net cash outflow from investing activities (250 975) (123 168)
Finance activities
Net cash inflow from financing activities 72 642 59 107
Net (decrease)/increase in cash and cash equivalents
(22 971) 3 271
At beginning of the year 41 321 38 050
Cash and cash equivalents at end of year 18 350 41 321
ABRIDGED CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
Actuarial gains and losses recognised directly in equity
(21 822) 14 161
Gross (30 308) 19 945
Deferred tax 8 486 (5 784)
Net (expense)/income recognised directly in equity
(21 822) 14 161
Profit for the year 2 918 195 010
Total recognised (expense)/income for the year (18 904) 209 171
Attributable to:
Equity holders of the company (32 566) 186 646
Minority interest 13 662 22 525
(18 904) 209 171
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 2007.
CONTINGENCIES
The bank and other guarantees given by the group to third parties amounted to
R5,4 million as at 31 December 2008 (R7,4 million as at 31 December 2007).
31 December 31 December
2008 2007
R`000 R`000
Borrowings
Current 20 817 11 965
Overdrafts net of cash (18 350) (41 321)
Non-current 178 434 115 161
180 901 85 805
The movement in the borrowings can be analysed as follows :
Year ended December 2008 R`000
Opening amount 85 805
Repayments (22 296)
Amounts raised 117 392
Closing amount 180 901
Fair value adjustments on financial instruments
Forward foreign exchange contracts -
fair value hedges 274 540
Total 274 540
Annual General Meeting
The annual report will be mailed to shareholders on or about 31 March 2009 along
with the notice of annual general meeting. The annual general meeting will be
held on 5 May 2009 at 14h00 at Metair Investments Limited, 10 Anerley Road,
Parktown, Johannesburg.
Dividend
No dividend has been declared.
Auditors` report
The 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.
ABRIDGED GROUP BALANCE SHEETS
31 December 31 December
2008 2007
R`000 R`000
ASSETS
Non-current assets 842 608 827 404
Property, plant and equipment 714 001 702 417
Intangible assets 40 254 49 093
Investment in associates 40 423 22 352
Defined benefit asset 21 016
Deferred taxation 47 930 32 526
Current assets 1 290 793 1 079 221
Inventory 769 013 608 243
Trade and other receivables 398 181 355 586
Derivative financial assets 274 540
Cash and cash equivalents 123 325 114 852
Total assets 2 133 401 1 906 625
EQUITY AND LIABILITIES
Capital and reserves 1 020 074 1 100 837
Share capital and premium 42 876 42 876
Share-based payment reserve 3 389 3 074
Treasury shares (124 532) (131 813)
Non-distributable reserves 36 585 25 139
Retained earnings 1 061 756 1 161 561
Ordinary shareholders equity 1 020 074 1 100 837
Minority interest 93 590 89 295
Total equity 1 113 664 1 190 132
Non-current liabilities 298 545 242 048
Interest bearing borrowings 78 434 15 161
Cumulative redeemable preference shares in respect of The Metair Share Incentive
Trust 100 000 100 000
Post-employment medical benefits 17 810 16 758
Defined benefit liability 11 085
Deferred taxation 91 216 110 129
Current liabilities 721 192 474 445
Trade and other payables 538 279 357 063
Borrowings 20 817 11 965
Taxation 5 552 4 832
Provisions for liabilities and charges 51 418 27 054
Dividends payable 151
Bank overdrafts 104 975 73 531
Total liabilities 1 019 737 716 493
Total equity and liabilities 2 133 401 1 906 625
Net asset value per share (cents) 720 775
Capital expenditure 176 860 129 691
Capital commitments
- contracted 62 283 31 512
- authorised but not yet contracted 49 683 43 735
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg
2001
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
NATURE OF OPERATIONS
Metair has been listed since 1948. Metair comprises six 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 acid batteries, lighting and
signalling devices, plastic mouldings, wiring harnesses, front-end modules and
brake pads. Products are supplied to South African assemblers of new vehicles,
the replacement market and a proportion of output is exported.
RESULTS
No one will dispute that 2008 was a momentous year - for the industry in general
and for Metair in particular. Metair celebrated its 60th anniversary as a listed
company under rather challenging conditions. The period under review proved to
be very fluid with performance in the first half mostly influenced by conditions
in the South African market, local customers` strategies and Rand volatility.
Performance in the second half of the year was affected by conditions and events
in the global market, especially from October 2008 when the full impact of the
financial crisis resulted in a sharp downturn in world economic activity. The
Rand continued to be volatile during the second half and devalued by
approximately 32% against the Yen in the last quarter.
Worldwide decline in vehicle demand has also triggered the need for impairment
testing in all subsidiary companies and for all of the group`s investments. This
requires that we comment on headline earnings as well as earnings.
Headline earnings per share for the full year was 74 cents per share compared to
124 cents per share achieved in the previous financial year. This represents a
40% decline in headline earnings.
Earnings per share after impairments for the full year was a loss of 9 cents per
share compared to a profit of 123 cents per share in the previous period,
reflecting a 107% decline.
The total impairment write-off amounts to R123 million. Excluding the effect of
impairment charges, the main loss-making operating subsidiaries are Smiths
Plastics (Pty) Ltd, Hella SA (Pty) Ltd, Alfred Teves Brake Systems (Pty) Ltd and
Unitrade 745 (Pty) Ltd.
While turnover increased by 40%, operating margins came under severe pressure
mainly in the Original Equipment Manufacturer (OEM) side of the business. Hesto
Harnesses (Pty) Ltd experienced a very difficult year as it operated under
severe cash flow constraints due to substantial foreign exchange currency under-
recovery, increase in interest charges and pricing pressure from OEMs.
Turnover for the period grew by 40% to R4 180 million compared to R2 984 million
in 2007. Included in the turnover is the full year`s effect of trade for
Automould that was purchased in October 2007, and nine months of trading from
Aristons and SPE that was purchased in March 2008 and combined into Kimitar.
Second-half trade also includes three months of trading from ATE that was
purchased in October 2008. Elimination of trade from the recent acquisitions
limited the turnover growth to 34%.
A loss after tax attributable to ordinary shareholders of R13 million compared
to a profit of R175 million in 2007 was recorded. Operating profit declined to
R94 million from R282 million.
Profit before tax declined to R75 million compared to R287 million. The primary
reason for this decline was impairment charges of R123 million and an increase
in net interest charges of R34 million. The main drivers behind the increased
interest charged were increased investment in plant and equipment as well as
strategic acquisitions.
Cash generated from operations was R369 million compared to R240 million in
2007. Cash outflow from investing activities required to support planned volume
ramp-ups by customers resulted in an increase of cash outflow of R251 million
(2007: R123 million).
Current assets (inventory and debtors excluding cash) increased by R203 million
due to increased stockholding arising from lower production, a weakening
exchange rate, as well as an increase in commodity prices.
The balance sheet remains strong with a debt to total capital ratio of 15%
(2007: 7%).
DIRECTORATE
Callie van der Merwe retired as Financial Director for the group on 30 November
2008 and Brian Jacobs was appointed as his replacement on 1 December 2008.
Jonathan Best was appointed on 24 February 2009 as independent non-executive
director and is a member of the Audit Committee.
PROSPECTS
Metair is of the opinion that the projected decline in the production of
vehicles in South Africa - to a very conservative internal projection of 375 000
vehicles for 2009 - signals a review of required production levels. This decline
of 28% from the production levels achieved in 2008 requires all subsidiaries to
redefine their businesses and restructure to these lower levels.
Metair group subsidiary companies with high capital investments, a large
dependence on individual customers and have turnover less than R750 million will
be challenged to be profitable under these circumstances and will require major
restructuring.
Volume drop for the year is skewed towards the first half of the year. The group
will therefore struggle to reduce its current internal overstocking position in
the first half. Capital expenditure for the year will be focused on First
National Battery and Supreme Springs and will mostly be incurred in the first
half of the year. Capital expenditure relates mainly to investment to support
the aftermarket business and raw material beneficiation. Barring any further
volume cutbacks from customers below the projected Metair volumes, real working
capital and inventory reduction will only start taking effect in the third or
fourth quarter.
Under these circumstances, relationships with customers will be tested and will
require major attention for the group to remain competitive. The devaluation of
the Rand offers some protection under these circumstances but the situation
still requires a realistic approach from customers.
Metair recognises the severity of a declining demand for vehicles but remains
positive that, with its focus on cash generation and preservation, it will be
able to survive these difficult times. It remains realistic, though, to the
extent that it could well be necessary to re-evaluate all business models and
practices and that some businesses may even require responsible exit strategies.
Metair believes it to be prudent not to declare a dividend under current trading
conditions and will review the dividend declaration on an ongoing basis at both
interim and year-end periods.
Signed on behalf of the board
OME Pooe - Chairman CT Loock - Managing Director
Johannesburg, 19 March 2009
EXECUTIVE DIRECTORS: CT Loock (Managing); BM Jacobs (Finance)
NON-EXECUTIVE DIRECTORS: OME Pooe (Chairman); AD Plummer*; A Joffe; GMC Ryan; B
Molotlegi
INDEPENDENT NON-EXECUTIVE DIRECTORS: JG Best; RS Broadley; A Galiel; L Soanes*
COMPANY SECRETARY: SM Vermaak
*British
Date: 23/03/2009 07:05:02 Produced by the JSE SENS Department.
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