| Thu 12 Aug 2010, 14:33 | | MTA - Metair Investments Limited - Interim report for the six months ended 30 |
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MTA
MTA
MTA - Metair Investments Limited - Interim report for the six months ended 30
June 2010 and trading statement
METAIR INVESTMENTS LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
"Metair" or "the group")
(Reg No. 1948/031013/06)
Share code: MTA ISIN code: ZAE000090692
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2010 AND TRADING STATEMENT
HEPS increased to 89 cps
Cash generated by operations of R224 million
Net cash on hand increased by R130 million to R210 million
Special dividend of 60 cps declared
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Unaudited Unaudited Audited
Revenue 1 836 578 1 659 433 3 342 053
Cost of sales (1 455 108) (1 438 443) (2 807 100)
Gross profit 381 470 220 990 534 953
Other operating income 25 017 35 640 109 711
Impairment of assets (1 838) (30 544) (47 082)
Distribution, administrative and other expenses (225 589)
(227 613) (455 665)
Operating profit/(loss) 179 060 (1 527) 141 917
Interest income 12 097 3 665 13 243
Interest expense (10 880) (22 412) (37 360)
Share of results of associates 6 801 (216) 419
Profit/(loss) before tax 187 078 (20 490) 118 219
Taxation (53 783) (7 324) (55 023)
Profit/(loss) for the period 133 295 (27 814) 63 196
Attributable to:
Equity holders of the company 124 430 (27 283) 52 210
Non-controlling interests 8 865 (531) 10 986
133 295 (27 814) 63 196
Depreciation and amortisation (63 554) (46 152) (108 468)
Basic earnings/(loss) per share (cents) 87
(19) 37
Headline earnings/(loss) per share (cents) 89
(3) 67
Dividend per share (cents) 15
Number of shares in issue (`000) 152 532 152 532 152 532
Calculation of headline earnings/(loss) per share (R`000)
Net profit/(loss) attributable to
ordinary shareholders 124 430 (27 283) 52 210
Impairment charges 1 838 30 544 (3 628)
Tax relief (5 620) (5 620)
Impairment charge attributable
to non-controlling interests (3 627) 47 082
Loss on disposal of property,
plant & equipment 152 2 212 5 342
Headline earning/(loss) 126 420 (3 774) 95 386
Weighted average number of
shares in issue (`000) 142 352 141 707 142 352
Diluted earnings per share
No diluted earnings per share is reflected for the year ended 31 December 2009
as well as the six months ended 30 June 2010 and 2009.
Share options in terms of the Metair Share Trust are anti-dilutive.
GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Unaudited Unaudited Audited
Profit/(loss) for the period 133 295 (27 814) 63 196
Other comprehensive income:
Actuarial gains recognised
directly in equity
Gross 21 118
Deferred tax (5 910)
Net other comprehensive income 15 208
Total comprehensive income for
the period 133 295 (27 814) 78 404
Attributable to:
Equity holders of the company 124 430 (27 283) 66 932
Non-controlling interests 8 865 (531) 11 472
133 295 (27 814) 78 404
GROUP STATEMENT OF CASH FLOWS
Six months ended Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Unaudited Unaudited Audited
Operating activities
Profit/(loss) before tax 187 078 (20 490) 118 219
Non-cash items 32 732 112 024 149 394
Working capital changes 4 437 23 765 145 642
Cash generated from operations 224 247 115 299 413 255
Finance charges (10 880) (22 412) (37 360)
Taxation paid (29 373) (41 508) (70 663)
Dividends paid (21 015) (8 441)
Dividend income from associate 14 700 20 695
Net cash inflow from
operating activities 162 979 66 079 317 486
Investing activities
Investment income 12 097 3 665 13 243
Net cash used in other investing
activities (46 308) (27 488) (94 043)
Net cash outflow from investing
activities (34 211) (23 823) (80 800)
Net cash outflow from financing
activities (85 248) (9 551) (22 493)
Net increase in cash and cash
equivalents 43 520 32 705 214 193
Cash and cash equivalents at
beginning of period 232 543 18 350 18 350
Cash and cash equivalents at
end of period 276 063 51 055 232 543
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
Accounting policies
The consolidated condensed interim 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
IAS34 - Interim Financial Reporting. The accounting policies applied to the
condensed interim financial information are consistent with those used in the
annual financial statements for the year ended 31 December 2009.
This interim report has not been reviewed or audited by the auditors.
Contingencies
The bank and other guarantees given by the Group to third parties amounted to R
6.6 million as at 30 June 2010 (R6,2 million as at
30 June 2009).
BORROWINGS
Six months ended Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Current 20 079 19 421 97 298
Overdrafts net of cash (276 063) (51 055) (232 543)
Non-current 45 675 169 096 54 217
Total (210 309) 137 462 (81 028)
The movement in the borrowings can be analysed as follows:
Opening amount (81 028) 180 901 180 901
Repayments (129 543) (43 604) (263 606)
Amounts raised 262 165 1 677
Closing amount (210 309) 137 462 (81 028)
DECLARATION OF SPECIAL DIVIDEND
Notice is hereby given that a special dividend of 60 cents per ordinary share
has been declared in respect of the six months ended 30 June 2010. The last date
to trade cum dividend will be Friday, 10 September 2010. Trading will commence
ex dividend from Monday, 13 September 2010 and the record date will be Friday,
17 September 2010. The date of payment will be Monday, 20 September 2010.
Share certificates may not be dematerialised or rematerialised between Monday,
13 September 2010, and Friday, 17 September 2010, both days inclusive.
GROUP BALANCE SHEETS
Six months ended Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 662 815 692 177 657 892
Intangible assets 30 553 29 313 29 514
Investment in associates 26 948 25 507 20 147
Defined benefit asset 21 240 19 962
Deferred taxation 22 839 62 305 34 970
764 395 809 302 762 485
Current assets
Inventories 522 635 582 253 518 091
Trade and other receivables 454 510 381 859 428 076
Derivative financial assets 3 638 7 382 160
Taxation 15 274 9 700
Cash and cash equivalents 313 706 153 137 282 205
1 294 489 1 139 905 1 238 232
Total assets 2 058 884 1 949 207 2 000 717
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 42 876 42 876 42 876
Treasury shares (123 776) (124 532) (124 289)
Share-based payment reserve 4 952 3 389 3 389
Non-distributable reserves 23 110 21 669 16 309
Retained earnings 1 245 578 1 049 469 1 148 964
Ordinary shareholders` equity 1 192 740 992 871 1 087 249
Non-controlling interests 105 699 93 059 96 772
Total equity 1 298 439 1 085 930 1 184 021
Non-current liabilities
Interest bearing borrowings 45 675 69 096 54 217
Cumulative redeemable preference shares in respect of The Metair Share Incentive
Trust 100 000
Post-employment medical benefits 19 496 18 274 19 246
Defined benefit liability 3 594
Deferred taxation 71 698 92 850 83 778
136 869 283 814 157 241
Current liabilities
Trade and other payables 476 684 358 962 441 784
Borrowings 20 079 19 421 97 298
Taxation 14 715
Provisions for liabilities and charges 72 629 85
584 60 876
Derivative financial liabilities 1 826 13 414 9 835
Bank overdrafts 37 643 102 082 49 662
623 576 579 463 659 455
Total liabilities 760 445 863 277 816 696
Total equity and liabilities 2 058 884 1 949 207 2 000 717
Net asset value per share (cents) attributable to ordinary shareholders
851 710 776
Capital expenditure 47 253 44 285 116 156
Capital commitments
- contracted 57 770 44 746 28 398
- authorised but not contracted 33 787 34 412 24 986
GROUP STATEMENT OF CHANGES IN EQUITY
Share-
Share Treasury based Non-distri-
capital shares payment butable
& premium reserve reserve
R`000 R`000 R`000 R`000
Half-year ended 30 June 2010
Balance at 1 January 2010 42 876 (124 289) 3 389 16 309
Net profit for the period
Total comprehensive income for the period
Employee share option scheme:
- Value of services provided 1 563
Net movement in treasury shares 513
Transfer of associate profit
and dividend 6 801
Dividend
Balance at 30 June 2010 42 876 (123 776) 4 952 23 110
Half-year ended 30 June 2009
Balance at 1 January 2009 42 876 (124 532) 3 389 36 585
Net loss for the period
Total comprehensive income for the period
Employee share option scheme:
- Value of services provided 80
Transfer of associate profit
and dividend (80) (14 916)
Balance at 30 June 2009 42 876 (124 532) 3 389 21 669
Year-ended 31 December 2009
Balance at 1 January 2009 42 876 (124 532) 3 389 36 585
Net profit for the year
Actuarial gains
Total comprehensive income for the period
Net movement in treasury shares 243
Transfer of associate profit and dividend (20 276)
Dividend
Balance at 31 December 2009 42 876 (124 289) 3 389 16 309
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attri-
butable
to equity
holders Non-
Retained of the controlling Total
earnings company interests equity
R`000 R`000 R`000 R`000
Half-year ended 30 June 2010
Balance at 1 January 2010 1 148 964 1 087 249 96 772 1 184 021
Net profit for the period 124 430 124 430 8 865 133 295
Total comprehensive income for the period 124 430 124 430
8 865 133 295
Employee share option scheme:
- Value of services provided 1 563 62 1 625
Net movement in treasury shares 513 513
Transfer of associate profit and dividend (6 801)
Dividend (21 015) (21 015) (21 015)
Balance at 30 June 2010 1 245 578 1 192 740 105 699 1 298 439
Half-year ended 30 June 2009
Balance at 1 January 2009 1 061 756 1 020 074 93 590 1 113 664
Net loss for the period (27 283) (27 283) (531) (27 814)
Total comprehensive income
for the period (27 283) (27 283) (531) (27 814)
Employee share option scheme:
- Value of services provided 80 80
Transfer of associate profit
and dividend 14 996
Balance at 30 June 2009 1 049 469 992 871 93 059 1 085 930
Year-ended
31 December 2009
Balance at 1 January 2009 1 061 756 1 020 074 93 590 1 113 664
Net profit for the year 52 210 52 210 10 986 63 196
Actuarial gains 14 722 14 722 486 15 208
Total comprehensive
income for the period 66 932 66 932 11 472 78 404
Net movement in treasury
shares 243 243
Transfer of associate
profit and dividend 20 276
Dividend (8 290) (8 290)
Balance at
31 December 2009 1 148 964 1 087 249 96 772 1 184 021
SEGMENTAL REVIEW
For the six months
ended 30 June 2010
Local Direct exports
Original Original
equip- After- Non- equip- After-
ment market auto ment market
Revenue 1 112 569 436 756 177 027 41 875 51 962
Profit/(loss) before
interest and tax 58 219 82 422 17 893 3 736 1 164
Finance costs
Profit before tax
Included in the above:
- Depreciation and
- amortisation
- Impairment charges
for the six months
ended 30 June 2009
Revenue 1 019 167 368 220 166 872 30 150 55 884
(Loss)/profit before
interest and tax (57 521) 26 116 13 786 (1 128) 3 474
Finance costs
Loss before tax
Included in the above:
- Depreciation and
- amortisation
- Impairment charges
for the year ended
31 December 2009
Revenue 2 029 137 748 355 323 168 73 494 111 833
(Loss)/profit before
interest and tax (92 848) 95 099 53 697 8 471 4 807
Finance costs
Profit before tax
Included in the above:
- Depreciation and amortisation
- Impairment charges
SEGMENTAL REVIEW (CONTINUED)
For the six months ended
31 June 2010
Direct exports
Recon-
Non- Property ciling
auto rental items Total
Revenue 16 389 28 887 (28 887) 1 836 578
Profit/(loss) before
interest and tax (3 140) 28 887 (3 320) 185 861
Finance costs 1 217
Profit before tax 187 078
Included in the above:
- Depreciation and amortisation (63 554)
- Impairment charges (1 838)
for the six months
ended 30 June 2009
Revenue 19 140 27 214 (27 214) 1 659 433
(Loss)/profit before
interest and tax 1 754 27 214 (15 438) (1 743)
Finance costs (18 747)
Loss before tax (20 490)
Included in the above:
- Depreciation and amortisation (46 152)
- Impairment charges (30 544)
for the year ended
31 December 2009
Revenue 56 066 54 447 (54 447) 3 342 053
(Loss)/profit before
interest and tax (836) 54 447 19 499 142 336
Finance costs (24 117)
Profit before tax 118 219
Included in the above:
- Depreciation and amortisation (108 468)
- Impairment charges (47 082)
The reconciling items relate to Metair head office companies as well as property
rental.
CONFERENCE CALL
Shareholders are advised that a conference call in respect of these results will
be held on Friday 13 August 2010 at 10h00.
Details of the conference call has been sent via SENS and posted on our website.
COMMENTS
Results
The board of directors is pleased to announce the results for the first half of
2010 to shareholders.
Headline earnings per share for the period were 89 cents per share compared to
the loss of 3 cents per share achieved in the prior comparative period. Basic
earnings for the period were 87 cents per share (2009: 19 cents per share
loss).
Total turnover increased by 11% to R1 837 million as the Group secured new
business from an Original Equipment Manufacturer ("OEM"), VWSA, which launched a
new entry-level vehicle for the local market. The improved margins resulted
from, inter alia, the positive effects of the restructuring that took place in
2009, increased volumes and the exiting of unprofitable businesses.
Local Original Equipment ("OE") turnover increased by 9,2% to R1 113 million and
generated a profit before interest and tax of R58 million (2009: R58 million
loss).
Turnover in the local aftermarket segment increased by 18,6% to R437 million
with profit before interest and tax of R82 million. This is up from the R368
million turnover and operating profit of R26 million in the prior comparative
period.
The local non-automotive business grew by 6% to R177 million and profit before
interest and tax increased to R18 million from R14 million.
Exports across all the segments grew by only 4,8% to R110 million as the Rand
remained strong during the period.
The Group also expanded its segmental reporting to include its extensive
investment in property. Comparative information has been reclassified
accordingly. Property income is based on market-related rates applicable to the
area. Income attributable to this segment of the market amounted to R29 million
during the period.
Other operating income of R25 million includes, inter alia, government grants,
cash discounts received, bad debts recovered and fair value gains.
The impairment of R1,8 million resulted from a write down of plant and equipment
at Alfred Teves Brake Systems (Proprietary) Limited related to contracts for
OEMs.
The Group`s cost saving and efficiency improvement activities resulted in
distribution, administration and other costs decreasing by 1%.
Cash generated by operations was R224 million. During the period debt of R86
million was settled and the net cash on hand at the end of the period was R210
million up from R81 million at year end.
Review of operations
The Group has continued to focus on cash management, cost control and
manufacturing excellence. All businesses within the Group contributed positively
to profits and generated free cash flow. OE production totalled 213 905 vehicles
compared to 165 050 in the first half of last year. During the 2009 financial
year the Group`s subsidiaries were restructured to be at least cashflow-neutral
on a sustainable basis at the lower production volumes. The Group was therefore
well positioned to benefit from the improved economic conditions experienced in
the first half of the year.
The number of self-propelled vehicles on the road in South Africa (vehicle parc)
is estimated to be 8,1 million vehicles compared to 7,2 million vehicles four
years ago. The growth in the size of the vehicle parc supports Metair`s strategy
of continuing to focus on increasing its aftermarket penetration.
The OE business remains an important part of Metair`s business. The future
success of this sector wil depend on Metair securing business from the OEMs when
new models are launched at reasonable margins while remaining competitive
relative to low-cost countries such as India and China. Metair will continue to
engage and work with all of its stakeholders, especially its customers, in
improving its overall level of competitiveness.
Metair will leverage its expertise to grow the aftermarket and non-auto
businesses. Value-accretive acquisition opportunities will also be evaluated.
Industry
The OE market experienced an improvement in activity during the period with the
launch of two new models and a recovery in local vehicle demand. The next
vehicle launch is planned for the second half of 2011 with a new high-volume
light commercial vehicle with a high percentage of exports.
The current view is that the market should sustain itself at the first-half
levels for the second half of 2010.
Special dividend
A special dividend of 60 cents per ordinary share has been declared in respect
of the six months ended 30 June 2010 and will be paid out of retained income.
The rationale for declaring a special dividend is that the Group has adjusted to
the demand levels, which are substantially lower than experienced during the
period before the October 2008 financial crisis. The focus on working capital
reduction and cash management made it possible to declare a special dividend.
Prospects
Performance in the second half of the year is dependent on OE production volumes
and demand sustaining itself at current levels in a stable Rand exchange rate
environment that`s comparable with the first half exchange rates. Metair`s
current view on total vehicle production for the year is approximately 422 000
vehicles for passenger and light commercial vehicles.
In a stable volume, labour and exchange rate environment, backed by continued
strong demand in the aftermarket segment, performance in the second half should
be comparable to that of the first half.
The Group is currently engaged in tough annual wage negotiations. Any labour
action during the period will be disruptive for Metair and the industry.
Trading statement
In terms of Service Issue number 13 of the Listings Requirements of the JSE
Limited, issued during February 2010, companies are required to publish a
trading statement as soon as they become aware that the financial results for
the period to be reported upon next will differ by at least 20% from the
financial results for the previous corresponding period even if it does not have
the reasonable certainty in terms of providing a range. A further announcement
will then be required once it has certainty on the range.
Accordingly, Metair shareholders are advised that the Group has reasonable
certainty that the Group`s earnings for the year ending 31 December 2010 will be
positively impacted by at least 20%. Accordingly, the Group will issue a further
announcement once it has achieved certainty regarding the range of expected
profitability.
This trading statement has not been reviewed or reported on by Metair`s
auditors.
REGISTRARS
Computershare Investor Services (Pty) Limited
70 Marshall Street
JOHANNESBURG
2001
SPONSOR
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Signed on behalf of the Board
O M E Pooe C T Loock
Chairman Managing Director
JOHANNESBURG, 12 August 2010
EXECUTIVE DIRECTORS: CT Loock (Managing); BM Jacobs (Finance)
NON-EXECUTIVE DIRECTORS: OME Pooe (Chairman); A Joffe; B Molotlegi
INDEPENDENT NON-EXECUTIVE DIRECTORS: RS Broadley; L Soanes*; A Galiel; JG Best
COMPANY SECRETARY: SM Vermaak *British
Date: 12/08/2010 14:33:02 Produced by the JSE SENS Department.
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