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MTA
MTA
MTA - Metair Investments Limited - Interim report for the six months ended 30
June 2011
METAIR INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(Registration No. 1948/031013/06)
Share code: MTA ISIN code:ZAE 000090692
("Metair" or "the group")
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2011
HEPS increased 44% to 128cps
Net cash on hand of R245 million
EBITDA of R322 million
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
Revenue 2 051 834 1 836 578 3 753 236
Cost of sales (1 584 247) (1 455 108) (2 958 998)
Gross profit 467 587 381 470 794 238
Other operating income 39 645 25 017 48 972
Profit on property, plant &
equipment insurance recovery 28 370
Impairment (charges)/reversals (1 838) 19 687
Distribution, administrative
and other expenses (227 845) (225 589) (459 948)
Operating profit 307 757 179 060 402 949
Interest income 5 436 12 097 18 913
Interest expense (4 013) (10 880) (14 075)
Share of results of associates 8 735 6 801 16 759
Profit before tax 317 915 187 078 424 546
Taxation (85 328) (53 783) (121 009)
Profit for the period 232 587 133 295 303 537
Attributable to:
Equity holders of the company 207 985 124 430 277 682
Non-controlling interests 24 602 8 865 25 855
232 587 133 295 303 537
Depreciation and amortisation (42 270) (38 362) (101 257)
Basic earnings per share (cents 147 87 198
Headline earnings per share (cents) 128 89 189
Number of shares in issue (`000) 152 532 152 532 152 532
Number of shares in issue excluding
treasury shares (`000) 141 203 140 097 141 058
Weighted average number of
shares in issue (`000) 141 159 142 352 140 363
Calculation of headline earnings per share (R`000)
Net profit attributable to ordinary
shareholders 207 985 124 430 277 682
Impairment charges/(reversals) 1 838 (19 687)
Tax effect of impairment reversals 4 562
Impairment reversals attributable to
non-controlling shareholders 2 945
(Profit)/loss on disposal of property,
plant & equipment (4 509) 152 101
Profit on property, plant & equipment
insurance recovery (28 370)
Tax effect of insurance recovery 5 663
Headline earnings 180 769 126 420 265 603
Diluted earnings per share
Basic earnings per share (cents) 144 195
Headline earnings per share (cents) 125 187
Weighted average number of shares in
issue (`000) 141 159 140 363
Adjustment for dilutive share
options (`000) 3 248 1 990
144 407 142 353
No diluted earnings per share is reflected for the six months ended 30 June 2010
as the strike price of the options was higher than the share price.
GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
Profit for the period 232 587 133 295 303 537
Other comprehensive income:
Actuarial losses recognised
directly in equity
- Gross (15 626)
- Deferred tax 3 990
Net other comprehensive income (11 636)
Total comprehensive income for
the period 232 587 133 295 291 901
Attributable to:
Equity holders of the company 207 985 124 430 266 880
Non-controlling interests 24 602 8 865 25 021
232 587 133 295 291 901
GROUP BALANCE SHEETS
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 730 453 662 815 699 190
Intangible assets 25 325 30 553 26 367
Investment in associates 41 818 26 948 34 236
Defined benefit asset 7 402 21 240 6 504
Deferred taxation 22 839
804 998 764 395 766 297
Current assets
Inventory 608 245 522 635 606 547
Trade and other receivables 551 607 454 510 397 326
Derivative financial assets 111 3 638 23
Taxation 12 431
Cash and cash equivalents 320 569 313 706 305 572
1 480 532 1 294 489 1 321 899
Total assets 2 285 530 2 058 884 2 088 196
EQUITY AND LIABILITIES
Ordinary shareholders` equity 1 375 056 1 192 740 1 256 009
Non-controlling interests 134 543 105 699 113 910
Total equity 1 509 599 1 298 439 1 369 919
Non-current liabilities
Borrowings 40 785 45 675 31 912
Post-employment medical benefits 21 579 19 496 21 329
Deferred taxation 52 590 71 698 52 959
114 954 136 869 106 200
Current liabilities
Trade and other payables 551 002 476 684 502 639
Borrowings 20 527 20 079 22 424
Taxation 10 449 14 715 3 476
Provisions for liabilities
and charges 63 235 72 629 53 183
Derivative financial liabilities 1 790 1 826 14 607
Bank overdrafts 13 974 37 643 15 748
660 977 623 576 612 077
Total liabilities 775 931 760 445 718 277
Total equity and liabilities 2 285 530 2 058 884 2 088 196
Net asset value per share (cents)
attributable to ordinary shareholders
calculated on number of shares in
issue excluding treasury shares 974 851 890
Capital expenditure 75 589 47 253 124 513
Capital commitments
- contracted 51 839 57 770 58 513
- authorised but not contracted 78 127 33 787 108 812
GROUP STATEMENT OF CASH FLOWS
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
Operating activities
Profit before tax 317 915 187 078 424 546
Non-cash items 28 893 32 732 56 990
Working capital changes (97 600) 4 437 3 085
Cash generated from operations 249 208 224 247 484 621
Finance charges (4 013) (10 880) (14 075)
Taxation paid (66 292) (29 373) (112 123)
Dividends paid (95 824) (21 015) (113 769)
Dividend income from associate 3 920
Net cash inflow from operating
activities 83 079 162 979 248 574
Investing activities
Investment income 5 436 12 097 18 913
Net cash used in other investing
activities (65 676) (46 308) (121 232)
Net cash outflow from investing
activities (60 240) (34 211) (102 319)
Net cash outflow from financing
activities (6 068) (85 248) (88 974)
Net increase in cash and cash
equivalents 16 771 43 520 57 281
Cash and cash equivalents at
beginning of period 289 824 232 543 232 543
Cash and cash equivalents at
end of period 306 595 276 063 289 824
GROUP STATEMENT OF CHANGES IN EQUITY
Share- Non-
Share Treasury based distri-
capital & shares payment butable
premium R`000 reserve reserve
R`000 R`000 R`000 R`000
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
Net profit for the period
Actuarial losses
Total comprehensive income
for the period
Employee share option scheme:
- Value of services provided 1 535
- Loss on settlement (3 674)
Net movement in treasury shares 7 692
Transfer of associate profit
and dividend 6 038
Dividend ***
Balance at 31 December 2010 42 876 (116 084) 2 813 29 148
Net profit for the period
Total comprehensive income
for the period
Employee share option scheme:
- Value of services provided 2 270
- Loss on settlement (366)
Net movement in treasury shares 908
Transfer of associate profit and dividend 7 582
Dividend *
Balance at 30 June 2011 42 876 (115 176) 4 717 36 730
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attri-
butable
to
equity
holders Non-
Retained of the control- Total
interests company interests equity
R`000 R`000 R`000 R`000
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
Net profit for the period 153 252 153 252 16 990 170 242
Actuarial losses (10 802) (10 802) (834) (11 636)
Total comprehensive income
for the period 142 450 142 450 16 156 158 606
Employee share option scheme:
- Value of services provided 1 535 75 1 610
- Loss on settlement (3 674) (3 674)
Net movement in treasury shares 7 692 7 692
Transfer of associate profit
and dividend (6 038)
Dividend *** (84 734) (84 734) (8 020) (92 754)
Balance at 31 December 20101 297 256 1 256 009 113 910 1 369 919
Net profit for the period 207 985 207 985 24 602 232 587
Total comprehensive income
for the period 207 985 207 985 24 602 232 587
Employee share option scheme:
- Value of services provided 2 270 105 2 375
- Loss on settlement (366) (366)
Net movement in treasury shares 908 908
Transfer of associate profit
and dividend (7 582)
Dividend * (91 750) (91 750) (4 074) (95 824)
Balance at 30 June 2011 1 405 909 1 375 056 134 543 1 509 599
* An ordinary dividend of 65 cents per share was declared in respect of the year
ended 31 December 2010.
** An ordinary dividend of 15 cents per share was declared in respect of the
year ended 31 December 2009.
*** A special dividend of 60 cents per ordinary share was declared in respect of
the six months ended 30 June 2010.
SEGMENTAL REVIEW
Revenue
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
Local
OE* 1 285 011 1 112 569 2 273 233
Aftermarket 433 776 436 756 895 384
Non-auto 206 134 177 027 353 710
1 924 921 1 726 352 3 522 327
Direct exports
OE* 45 789 41 875 84 560
Aftermarket 65 622 51 962 111 223
Non-auto 15 502 16 389 35 126
126 913 110 226 230 909
Property rental 30 436 28 887 58 650
Reconciling items ** (30 436) (28 887) (58 650)
Total 2 051 834 1 836 578 3 753 236
Net interest income
Profit before tax
SEGMENTAL REVIEW (CONTINUED)
Profit(loss) before interest and tax
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Unaudited Unaudited Audited
Local
OE* 149 998 58 219 150 418
Aftermarket 91 486 82 422 159 903
Non-auto 34 993 17 893 35 972
276 477 158 534 346 293
Direct exports
OE* (3 631) 3 736 873
Aftermarket 9 727 1 164 8 770
Non-auto 431 (3 140) (8 012)
6 527 1 760 1 631
Property rental 29 991 28 887 57 774
Reconciling items ** 3 497 (3 320) 14 010
Total 316 492 185 861 419 708
Net interest income 1 423 1 217 4 838
Profit before tax 317 915 187 078 424 546
*OE - Original Equipment
**The reconciling items relate to Metair head office companies as well as
property rental.
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
Accounting policies
This 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 and AC 500 standards as issued by the Accounting
Practices Board, or its successor. 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 2010.
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
R4,4 million as at 30 June 2011 (R6,6 million as at 30 June 2010).
Borrowings
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Current (20 527) (20 079) (22 424)
Overdrafts net of cash 306 595 276 063 289 824
Non-current (40 785) (45 675) (31 912)
Total 245 283 210 309 235 488
The movement in the borrowings
can be analysed as follows:
Opening amount 235 488 81 028 81 028
Repayments 13 774 129 543 155 119
Amounts raised (3 979) (262) (659)
Closing amount 245 283 210 309 235 488
Fair value adjustments on financial instruments
Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
R`000 R`000 R`000
Assets Liabi- Assets Liabi- Assets Liabi-
lities lities lities
Forward exchange
contracts -
fair value hedges 111 1 790 3 638 1 826 23 14 607
COMMENTARY
Metair has produced an excellent set of results for the six months ended 30 June
2011. Headline earnings per share increased to 128 cents per share (cps)
(2010:89 cps) and earnings before interest, tax, depreciation and amortisation
of R322 million (2010: R217 million) were earned. These figures exclude the
profit on the insurance claim relating to property, plant and equipment.
It was especially pleasing that during the period the group continued to balance
its earnings from the aftermarket and non-automotive sectors with that from the
Original Equipment (OE) sector.
DETAILED GROUP RESULTS
Turnover grew by 11,7% to R2 052 million.
Other operating income includes an insurance recovery of R14 million.
Distribution and administration expenses were well controlled and, when
compared to the comparative period, increased by 1%.
Operating profit for the period was R308 million (2010: R179 million).
Headline earnings amounted to R181 million compared to the R126 million in the
comparative period.
The balance sheet remains strong and working capital management continues to be
a key focus area. Trade and other receivables includes an insurance claim of R53
million.
Net asset value per share increased from 890 cents in December 2010 to 974
cents and net cash and cash equivalents on hand amounted to R245 million.
REVIEW OF OPERATIONS
Fire at First National Battery
On 5 May 2011 shareholders were advised that a fire destroyed the battery
formation (charging) facility at First National Battery`s Benoni plant. A
portion of the insurance claim relating to stock has been settled. An estimate
of insurance proceeds relating to the replacement of property, plant and
equipment has been made resulting in a profit of R28 million which was
recognised during the period. First National Battery also has insurance cover
for the loss of business, and included in these accounts is a recovery of R14
million as a preliminary best estimate for this loss in the first six months.
Metair expects all the insurance claims relating to the fire to be finalised
during the first quarter of 2012.
First National Battery plans to be at full production once more by November
2011.
Aftermarket, non-automotive and export sectors
Despite the fire at First National Battery the non-OE segment had a very
pleasing result. Profitability returned to non-automotive sectors as demand in
the local mining, utilities, telecoms and retail market delivered volume growth
of 16% and improved pricing was obtained in the export market. The normalised
margin in the local aftermarket sectors once the once off effect of the
insurance claim is excluded was 18,5%.
Growth in the aftermarket sector resulting from the increased number of vehicles
on the road in South Africa, the Group`s expanded product offering and sustained
activity in the mining, utility, telecommunication and warehousing industries is
expected.
Original Equipment
OE production for the six months totalled 240 721 vehicles compared to 211 053
vehicles for the comparable period. Volume growth despite the earthquake and
subsequent tsunami in Japan was achieved as customers launched new product
offerings, supported the export market and there was increased local market
demand. Although disruptions from the earthquake and tsunami had the potential
to have a significant negative impact we were fortunate that disruptions in the
local market were kept to a minimum.
The National Association of Automobile Manufacturers of South Africa`s current
view on total domestic production for the full year is approximately 540 000
(2010: 449 000) vehicles for passenger and light commercial vehicles. However,
Metair has a more conservative volume view that is more in line with what was
achieved in the first half of this year.
Capital expenditure and commitments
The Group has invested R76 million in this period in property, plant and
equipment with contracted commitments of R52 million for the remainder of the
year.
In addition to the above, the Group has also approved a total of R78 million for
expansionary and maintenance capital expenditure.
Prospects
The second half of the year will be challenging as OE volumes are expected to be
lower than the first half and cost push inflation may impact on margins.
Notwithstanding the above, the Group is well positioned to produce a
satisfactory result in the second half of the year.
REGISTRARS Computershare Investor Services (Pty) Limited
70 Marshall Street JOHANNESBURG 2001
SPONSOR: One Capital
Signed on behalf of the Board
O M E Pooe - Chairman
C T Loock - Managing Director
JOHANNESBURG, 16 August 2011
The interim report was produced by Mr BM Jacobs (Finance Director) B Comm, B
Acc, CA (SA).
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
Johannesburg
17 August 2011
Date: 17/08/2011 15:00:00 Produced by the JSE SENS Department.
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