| Mon 18 May 2009, 16:18 | | MML - Metmar - Audited Financial Results for the year ended 28 February 2009 |
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MML
MML
MML - Metmar - Audited Financial Results for the year ended 28 February 2009
Metmar Limited
Incorporated in the Republic of South Africa
(Registration number 1998/007269/06)
Share Code: MML ISIN Code: ZAE000078747
"Metmar" or "the Company"
Audited Financial Results for the year ended 28 February 2009
Highlights
Revenue +66,3%
Headline earnings per share +170,4%
Attributable profit +158,8%
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at February 2009 2008
(R`000) (R`000)
ASSETS
Non-current assets
Property, plant and equipment 28 114 11 663
Intangible assets 65 804 6 192
Investment in associate - 70 066
Financial assets held to maturity 67 902 21 401
161 820 109 322
Current assets
Inventories 167 881 101 481
Trade and other receivables 397 578 232 061
Cash and cash equivalents 78 671 107 074
644 130 440 616
Non-current assets classified as 106 383 1 009
held for sale
Total assets 912 333 550 947
EQUITY AND LIABILITIES
Equity and retained earnings 361 430 195 882
Non-current liabilities
Financial liabilities 41 975 825
Instalment sale agreements - 275
Deferred taxation 3 698 12
45 673 1 112
Current liabilities
Trade and other payables 330 013 236 162
Trade finance liabilities 157 731 114 374
Taxation payable 17 486 3 417
505 230 353 953
Total equity and liabilities 912 333 550 947
Net asset value per share (cents) 185,69 103,42
Net tangible asset value per share 163,55 100,15
(cents)
Number of shares in issue 194 637 127 189 407 002
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended February 2009 2008
(R`000) (R`000)
Continuing operations
Revenue 3 438 714 2 067 730
Cost of sales (3 182 448) (1 963 868)
Gross profit 256 266 103 862
Other operating income 45 411 6 636
Operating expenses (130 916) (51 484)
Operating profit 170 761 59 014
Income from equity accounted - 24 734
investment
Finance income 37 238 23 974
Finance costs (53 989) (22 950)
Profit before taxation 154 010 84 772
Taxation (40 390) (16 441)
Profit from continuing operations 113 620 68 331
Discontinuing operations
Profit before taxation 81 420 -
Taxation (17 552) -
Profit from discontinuing operations 63 868 -
Total
Profit before taxation 235 430 84 772
Taxation (57 942) (16 441)
Total profit for the year 177 488 68 331
Other comprehensive income: - 49
Movement in foreign currency - 428
reserves
Sale of subsidiary - minority - (379)
interests
Total comprehensive income for the 177 488 68 380
year
Profit attributable to:
Equity holders of group 174 445 67 407
Minority interest 3 043 924
177 488 68 331
Total comprehensive income
attributable to:
Equity holders of group 174 445 67 835
Minority interest 3 043 545
177 488 68 380
CONDENSED GROUP CASH FLOW STATEMENTS
For the years ended February 2009 2008
(R`000) (R`000)
Cash flows from operating activities
Cash generated from operations 58 878 123 818
Net finance (cost)/income (16 751) 1 024
Dividend received 53 655 4 200
Taxation paid (30 431) (19 757)
Net cash inflow from operating 65 351 109 285
activities
Net cash outflow from investing (134 872) (60 327)
activities
Net cash inflow from financing 41 118 28 044
activities
Total cash movement for the year (28 403) 77 002
Cash and cash equivalents at the 107 074 30 072
beginning of the year
Cash and cash equivalents at the end 78 671 107 074
of the year
CONDENSED GROUP STATEMENTS OF CHANGES IN EQUITY
Share Foreign
capital and currency Retained
premium reserve earnings
(R`000) (R`000) (R`000)
Balance at 1 March 2007 721 (428) 97 975
New share issue 53 500 - -
Total comprehensive income - 428 67 786
for the year
Distribution to shareholders (25 024) - -
Balance at 29 February 2008 29 197 - 165 761
New share issue 25 000 - -
Other - - (205)
Total comprehensive income - - 174 445
for the year
Distribution to shareholders (35 035) - -
Balance at 28 February 2009 19 162 - 340 001
Minority Total
interest equity
(R`000) (R`000)
Balance at 1 March 2007 379 98 647
New share issue - 53 500
Total comprehensive income 545 68 759
for the year
Distribution to shareholders - (25 024)
Balance at 29 February 2008 924 195 882
New share issue - 25 000
Other - (205)
Total comprehensive income 3 043 177 488
for the year
Distribution to shareholders (1 700) (36 735)
Balance at 28 February 2009 2 267 361 430
COMMENTARY
PROFILE AND STRUCTURE
The core activities of Metmar Trading (Pty) Limited, which comprises the major
business of Metmar, are commodity trading and financial and logistics
facilitation. Metmar is 61,2% owned by four of its executive directors who have
more than 100 years of combined experience in the international trading,
logistical and trade finance environment. Their industry experience is enhanced
by the highly knowledgeable four non-executive directors.
Metmar is focused on generating revenues related to the trading and production
of metals, plastics, chemicals, rubber and developing assets.
The Group has an extensive client base supported worldwide through a network of
agents and associates situated in more than 30 countries across the globe. The
Group`s long standing relationships with leading local financial institutions
and its extensive experience in identifying and the managing of associated risks
strengthen the Group`s value proposition to its customers and suppliers.
Metmar was listed on the Industrial Non-Ferrous Metals sector of the JSE Limited
in 2006 to gain access to capital to leverage its strategic objectives of
organic growth from the core business and ensuring long term growth prospects
through minority equity investments.
With increased access to funding in the equity market, Metmar has made excellent
progress to ensure its long term economic sustainability by taking up minority
interests in commodity producers.
The Group`s audited financial results for the year ended 28 February 2009
include those of the Company, together with all its subsidiaries and associate
from their respective dates of acquisition.
FINANCIAL PERFORMANCE
Against the backdrop of strong demand for commodities together with record
prices for most of the period under review, Metmar`s financial results for the
year ended 28 February 2009 are outstanding.
Revenue increased by 66,3% from R2,0 billion to R3,4 billion, with an
improvement in gross margin from 5% to 7,5%. Operating profit was R170,8 million
(2008: R59,0 million).
Due to the deterioration in market conditions since acquisition, goodwill
arising from the acquisition of West African Group ("WAG division") was impaired
by R18,1 million (2008: Nil).
Attributable profit for the year increased by 158,8% from R67,4 million in the
previous year to a record of R174,4 million.
Cash inflow from operating activities for the current year was R65,4 million
(2008: R109,3 million). The lower cash in flow in the current year compared to
2008 was predominantly due to an increase in working capital of R107,9 million.
Investment activities resulted in a net outflow of R134,9 million (2008: R60,3
million outflow), while the inflow from financing activities was R41,1 million
(2008: R28,0 million inflow).
Cash was used for making the following major R`000
investments:
- WAG division (69 929)
- purchase of property, plant and equipment (18 201)
- net purchase of financial assets (45 286)
Cash and cash equivalents at year end decreased to R78,7 million (2008: R107,1
million).
The impact of the additional amount tied up in working capital together with the
various investments made during the year has increased the Group`s ratio of net
debt/equity to 27.2% (2008: 4,9%). Notwithstanding this, the Group`s gearing
remains at acceptable levels.
OPERATIONAL PERFORMANCE
Despite the volatility, our core trading business has again exceeded
expectations and achieved another record in terms of revenue. Our bankers and
financial providers have, through their commitment and understanding, once more
delivered against our additional trade finance requirements and continue to be
supportive partners in the growth of our business.
On 2 April 2008, we acquired the businesses of West African International (Pty)
Limited and West African Ventures (Pty) Limited, and these have been
divisionalised into Metmar Trading. Trading activities of WAG division have
grown in product range and widened its markets, while synergies relating to the
Zambian business of our SNF plastics division have been realised.
Owen Plastics continues to operate profitably in the plastics recycling section
and provides two South African polymer producers with an on site waste polymer
removal solution. Tufflex Plastics became a wholly owned subsidiary of Owen
Plastics during the year.
The Zimbabwean screening activities of Gubha Resources` metallurgical coke stock
pile are nearing depletion and the screening equipment will thereafter be used
for other Zimbabwean screening activities.
Metmar acquired an additional 9% interest for R1,5 million in Metmar Industrial,
bringing its shareholding up to 60%.
STRATEGIC EQUITY STAKES TO SECURE PRODUCT
Kalahari ceded its mineral rights to Kalagadi during the year. Kalagadi has
completed its bankable feasibility and construction of the shaft and mine
infrastructure has commenced. The disposal of 50% of Kalagadi to ArcelorMittal
was finalised. Metmar received a special dividend of R26 million from Kalahari
Resources from the proceeds of the sale of 50% of Kalagadi. The first manganese
ore is anticipated to be produced by end May 2011, and sintered around end June
2011. The first manganese alloy should be available for sale in August 2011.
KIVU`s initial exploration activities in Rwanda have identified 19 tin and
tantalum ore bodies on the concession areas which were then ranked in order of
priority for exploitation. Early drilling results indicate that a reserve on the
first ore to be drilled in Gatumba South be evaluated before end July 2009.
Indications are that the result of the drilling will indicate a reserve in
excess of 6 million tons at a value-in-the-ground in excess of $120 million.
Overall the progress from KIVU is extremely pleasing with significant tantalum
present in areas over which rights are held.
In September 2008 Metmar entered into an agreement with Minero Mining Company
(Pty) Limited ("Minero") and Minero Zinc (Pty) Limited (Minero Zinc) to acquire
up to 20% of Minero Zinc for a cash consideration of R80 million. Prior to the
end of the financial year, Metmar acquired 10% of Minero Zinc for a cash
consideration of R40 million with the right to take the further 10% in the
future.
Minero Zinc has exercised its exclusive option to acquire 100% of The Pering
Mine (Pty) Limited (Pering Mine). Pering Mine is an open pit, truck and shovel
operation which produced lead and zinc concentrates ("concentrates") by means of
conventional crushing, milling and flotation processes from a low grade
Mississippi type ore body.
Zinc is currently a large part of Metmar`s business and if Metmar subscribes for
the full 20% of Minero Zinc, Metmar will have exclusive marketing rights for the
concentrates for an initial period of five years.
On 30 May 2008 the majority shareholders of PGR 17 Investments (Pty) Limited
("the vendors"), on behalf of all the shareholders, entered into an agreement to
sell the entire equity of PGR and Mogale to Kermas Limited, a public company
registered in the British Virgin Islands ("Kermas"). The offer was subject to
various conditions precedent which were all fulfilled on 24 November 2008.
As security for its obligations Kermas ceded to the vendors 5% of the shares and
loan account in Kermas South Africa (Pty) Limited ("Kermas SA") which company
holds 100% of Samancor SA. This cession entitled the vendors to all rights in
respect of title including rights to dividends, vote and other benefits.
The credit crisis and the collapse of commodity prices occurred before the
parties to the above agreement had fulfilled their respective obligations. Both
parties recognised that the world economic situation had changed and a new
agreement was entered into.
On 4 December 2008 a Cession and Delegation Agreement was entered into between
the vendors, Kermas and a new company, Ruukki SA (Proprietary) Limited ("Ruukki
SA"). Ruukki SA is 100% owned by Ruukki Group PLC, a Finnish listed company
("Ruukki").
Under this new agreement Kermas` rights and obligations of the first agreement
were ceded and assigned to Ruukki SA. Kermas stood as guarantor for Ruukki SA
and retained all its obligations with regard to providing security to the
vendors.
The irrevocable offer made by Kermas was to remain in force in the event that
the above agreement failed for any reason.
On 18 December 2008 a counter offer with different terms and conditions was
received and on 19 March 2009 a new cash offer was received from Ruukki. The
purchase price of the cash offer from Ruukki was more than 25% lower than the
original offer and was subject to suspensive conditions.
Following new demands, on 28 April 2009 the vendors gave notice to Ruukki and
Kermas that they could not entertain their requests. Apart from the initial
agreement, all agreements had thus failed to be concluded and the original
irrevocable offer made by Kermas came into effect.
The shares in Kermas SA are still being held as security by the vendors.
It is not certain at this stage what action the vendors will take and the
outcome may have a material effect on the price of Metmar`s shares. Accordingly,
shareholders are advised to exercise caution when dealing in the Company`s
shares until a further announcement is made.
OUTLOOK
The International Monetary Fund`s latest prediction is that in 2009 global
output will shrink by 1,3 percent, its first fall in 60 years.
While this is hardly good news, there are indications that the unprecedented
steep decline of the recent past has slowed. More promising is that the economic
indicators from different parts of the world, notably China, have shown signs of
improvement. When the upswing in the global economy does come, the timing of
which is uncertain, South Africa as well as Metmar may be early beneficiaries as
there will then be increased demand for the numerous commodities traded or
produced by Metmar.
In the meanwhile Metmar continues business but in smaller volumes and at lower
prices. Occasionally opportunities arise to do "special trades" at good prices,
which are a helpful contribution to the bottom line. In the current
circumstances it is unlikely that the financial results for the 2010 financial
year will equate to the record results achieved for 2009.
DISTRIBUTION TO SHAREHOLDERS
The directors are pleased to advise that the Company will be making a
distribution out of the share premium account of 30,0 cents per ordinary share
("the distribution") compared to a distribution of 18,0 cents per ordinary share
in June 2008.
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 20 August 2008.
The important dates relating to the distribution are set out below:
Last day to trade in order to participate Friday, 19 June 2009
in the distribution
Metmar shares commence trading "ex" the Monday, 22 June 2009
distribution
Record date for the distribution Friday, 26 June 2009
Payment date for the distribution Monday, 29 June 2009
Metmar share certificates may not be dematerialised or rematerialised between
Monday, 22 June 2009 and Friday, 26 June 2009, both dates inclusive.
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 2009 are consistent with those applied for the year ended
29 February 2008. The audited financial results of Metmar represent the
continuation of the financial statements of the legal subsidiary, Metmar
Trading, per Appendix B of IFRS 3 - Business Combinations.
2. Reconciliation of cash generated from operations
2009 2008
Year ended February (R`000) (R`000)
Profit before taxation 235 430 84 772
Taxation-discontinuing operations (17 552) -
Adjusted profit before taxation 217 878 84 772
Adjustments for:
Changes in working capital (107 900) 63 555
Income from equity accounted (63 868) (24 734)
investment
Goodwill impairment 18 089 -
Other non-cash movements (5 321) 225
Cash generated from operations 58 878 123 818
3. Distribution to shareholders
In deciding on the distribution to shareholders, the board took into account
that the income from the equity accounted investment is a non-cash item and
accordingly the aggregate amount available for distribution would be R113 619
826.
A distribution of 30,0 cents per share was therefore approved which will cost
R58 391 138.
4. Reconciliation between earnings and headline earnings
2009 2008
Year ended February (R`000) (R`000)
Earnings per share (cents)
- Headline 100,6 37,2
- Basic 90,3 36,5
Weighted average number of shares 193 261 532 184 740 703
in issue
Profit for the year 174 445 67 407
Adjustments for:
- Profit/(loss) on disposal of 245 (17)
property, plant and equipment
- Gain on disposal of subsidiary - (1 517)
- Fair value adjustments 123 2 791
- Goodwill impairment 19 589 -
Headline earnings 194 402 68 664
5. 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.
6. Related party transactions
During the period, the Company and its subsidiaries, in the ordinary course of
business, entered into various transactions with their related parties.
7. Corporate governance
The Metmar group complies with the code of Corporate Practice and Conduct
published in the King II Report on Corporate Governance.
8. Annual general meeting
The Company`s annual general meeting of shareholders will be held at Metmar`s
registered office at 24 Sloane Street, Bryanston on Wednesday, 12 August 2009 at
09h30.
Colin B Brayshaw
Non-executive Chairman
David J Ellwood Chief
Executive Officer
15 May 2009
Directors:
CB Brayshaw* (Chairman), DJ Ellwood (Chief Executive Officer), PP Boshoff, L
Matteucci*, GR Forsdyke, GP Lotis,
D Mashile-Nkosi*, AP Ruiters*, MF de Wet
* Non-executive
Company Secretary:
MRD Boyns (British)
Registered office:
24 Sloane Street, Bryanston, 2191
(PO Box 98549, Sloane Park, 2152)
Transfer secretaries:
Computershare Investor Services (Pty) Limited
(PO Box 61051, Marshalltown, 2107)
Sponsor:
QuestCo Sponsor (Proprietary) Limited
Auditors:
Grant Thornton
These results may be viewed on the internet on http://www.metmarlimited.com
Date: 18/05/2009 16:18:01 Produced by the JSE SENS Department.
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