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Bridgestone Firestone Maxiprest Limited - Financial Report
Bridgestone Firestone Maxiprest Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/006456/06)
Share code: BDS ISIN: ZAE000027447
("The Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2003
RESTATED
(Note 3)
UNAUDITED UNAUDITED AUDITED
SIX MONTHS SIX MONTHS 12 MONTHS
30 JUN 2003 30 JUN 2002 31 DEC 2002
R"000 R"000 R"000
Revenue 796 672 668 987 1 375 739
Cost of sales (575 243) (482 738) (990 747)
Gross profit 221 429 186 249 384 992
Other operating expenses (175 341) (142 264) (335 034)
Operating profit 46 088 43 985 49 958
Net finance cost (4 704) (2 370) (6 409)
Interest received 1 692 1 550 2 730
Interest expense (6 396) (3 920) (9 139)
Share of losses of associated companies (655) (90) (6 111)
Investment income 0 871 3 266
Profit before tax 40 729 42 396 40 704
Income tax expense (15 951) (13 530) (17 292)
Profit after tax 24 778 28 866 23 412
Attributable to outside shareholders (750) (504) (2 201)
Profit for the period 24 028 28 362 21 211
Shares in issue (million) 158.2 158.2 158.2
Earnings per share, weighted
and fully diluted (cents) 15.2 17.9 13.4
Headline earnings (R"000)
Profit for the period 24 028 28 362 21 211
Exceptional items after tax 1 103 1 577 14 197
25 131 29 939 35 408
Headline earnings per share (cents) 15.9 18.9 22.4
Dividend per share 0.0 5.0 10.0
Depreciation (R"000) 7 554 7 056 15 048
Capital Expenditure (R"000)
- incurred 17 486 12 511 25 862
- approved 5 267 5 000 25 300
BALANCE SHEET AT 30 JUNE 2003
RESTATED
(Note 3)
UNAUDITED UNAUDITED AUDITED
30 JUN 2003 30 JUN 2002 31 DEC 2002
R"000 R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 122 958 110 824 114 206
Goodwill 8 623 8 433 7 072
Investment in associates 14 968 840 13 363
Unconsolidated subsidiaries 5 536 17 730 5 536
Deferred taxation 2 621 - 2 621
Share incentive scheme 5 417 7 629 5 625
160 123 145 456 148 423
Current assets
Inventory 178 024 150 357 143 269
Accounts receivable 275 598 251 370 305 272
Cash at bank 0 17 378 59 323
453 622 419 105 507 864
TOTAL ASSETS 613 745 564 561 656 287
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 130 487 130 487 130 487
Accumulated profits 142 078 133 911 118 850
Other reserves (4 934) - (1 988)
Shareholders for dividend 0 7 910 7 910
267 631 272 308 255 259
Outside shareholders interest 1 905 523 4 436
Long term liabilities 793 554 137
Current liabilities
Accounts payable 244 630 259 710 356 840
Short term portion of long term
liabilities 471 275 395
Taxation payable 13 068 31 191 34 714
Bank overdraft 85 247 0 4 506
343 416 291 176 396 455
TOTAL EQUITY AND LIABILITIES 613 745 564 561 656 287
Net asset value per share (cents) 169.2 172.1 161.4
STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2002
RESTATED
UNAUDITED UNAUDITED AUDITED
30 JUN 2003 30 JUN 2002 31 DEC 2002
R"000 R"000 R"000
Share capital and premium
Balance at beginning and end of period 130 487 130 487 130 487
Accumulated profits
Balance at beginning of period, restated 118 050 113 459 113 459
- As previously reported 118 850 152 246 152 246
- Change in accounting policy (Note 2) (800) - -
- Correction of fundamental error 0 (38 787) (38 787)
Profit for the period 24 028 28 362 21 211
- As previously reported 24 028 29 736 21 211
- Correction of fundamental error (Note 3) - (1 374) -
Distribution to shareholders 0 (7 910) (15 820)
Balance at end of period 142 078 133 911 118 850
Shareholders for dividend
Balance at beginning of period 7 910 9 492 9 492
Distribution to shareholders 0 7 910 15 820
Paid during the period (7 910) (9 492) (17 402)
Balance at end of period 0 7 910 7 910
Other reserves
Balance at beginning of period (1 988) - -
Exchange difference arising on
translation of foreign operations (6 095) - (5 137)
Arising on consolidation of previously
unconsolidated subsidiaries 3 149 - 3 149
Balance at end of period (4 934) - (1 988)
Capital and reserves 267 631 272 308 255 259
ABRIDGED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2003
UNAUDITED UNAUDITED AUDITED
30 JUN 2003 30 JUN 2002 31 DEC 2002
R"000 R"000 R"000
Net cash flows from operating
activities (122 865) 8 586 61 166
Net cash flows from investing
activities (17 740) (10 717) (24 571)
Net cash flows from financing activities 732 (924) (1 607)
Net cash utilized (139 873) (3 055) 34 988
Cash and cash equivalents
at beginning of period 54 817 20 433 20 433
Effect of foreign exchange rate changes (191) (604)
Cash and cash equivalents end of period (85 247) 17 378 54 817
NOTES
1. Accounting policies
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice with the exception of a
segmental analysis which will be provided in the annual financial statements.
The principal accounting policies and calculation methods applied in the
preparation of these financial statements are consistent with those applied in
the prior period, with the exception of the adoption of AC 133. (See note 2)
2. Change in accounting policy
During the period, the Group changed its accounting policy with regards to
forward exchange contracts (FEC"s) to comply with AC 133, which deals with the
recognition and measurement of financial instruments. The statement is
effective for year ends commencing on or after 1 July 2002.
In line with the statement"s guidelines for first time adoption, an
adjustment to the opening accumulated profits has been made for the fair value
of outstanding FEC"s at 31 December 2002. The impact of the adjustment on
accumulated profits is as follows:-
R"000
Fair value adjustment for FEC"s 1 143
Tax (343)
Reduction in accumulated profits at beginning of period 800
3. Restated comparative figures
The comparative figures for the six months ending 30 June 2002 has been
restated to account for the liability and related interest as a result of the
South African Revenue Service ("SARS") tax settlement mentioned in the
directors" 31 December 2002 annual report, at the date that it is required to be
recognised. The restatement is summarised as follows:-
R"000
Reduction of accumulated profits at 31 December 2001 38 787
Interest to 30 June 2002 1 374
40 161
Reflected as increases in :-
Accounts payable 25 035
Taxation payable 15 126
40 161
INTERIM RESULTS JUNE 2003
THE COMPANY
Bridgestone Firestone Maxiprest Limited, listed on the JSE Securities
Exchange South Africa ("JSE") under "Cyclical Consumer Goods - Automobiles and
Parts" Sector, is sub-Saharan Africa"s predominant retreader, multi-brand new
tyre distributor and tyre management service provider. Its activities in the
region are conducted through 25 retread plants and 116 retail and service
outlets, also providing support for its 24-hour transporter, mining and
construction tyre breakdown service.
Operations are conducted through wholly - and majority-owned subsidiaries;
Maxiprest Tyres (passenger, truck, bus, agriculture and construction), Quality
Tyres (mining and earthmover), and Maxiprest Africa Operations, formerly
Pentamax (regional development and distribution). In the balance of sub-Saharan
Africa, operations exist in Botswana, Mozambique, Namibia, Swaziland, Zambia and
Zimbabwe. All operating entities in these areas are also classified as approved
Bridgestone Firestone agents.
Bridgestone Corporation (Japan), the world"s leading new tyre and rubber
manufacturer, holds a strategic 53% stake in the Group through its local
subsidiary Bridgestone SA Holdings (Pty) Ltd. Management, institutions and the
investing public hold the balance of the equity.
OPERATIONAL PERFORMANCE
The operational turnover for the six-month period under review was R797
million. Growth has been achieved on the back of full contributions from earlier
acquisitions.
The June 2002 income statement has been restated in respect of the
fundamental error associated with the SARS issue, which accords with generally
accepted accounting practice. The December 2002 financial statements were
impacted by charges approximating R27 million of which R12 million was
attributable to the Roadgrip Afrityre Holdings ("RGA") Group. With the impact of
the strengthening Rand over the past six months, which has resulted in foreign
exchange loss of R5,8 million and the disruption brought about by the tax
enquiries, the Board is of the view that the reported results to 30 June 2003
are satisfactory.
The Group"s associate empowerment company RGA has through rationalization
measures implemented in the previous financial year reduced the losses to R1.6
million for the period. Management envisages that the business in which it holds
a 40% interest will return to profitability during the next six months. This
business has won several major contracts including a substantial Government
State Tender together with Unitrans and the Ingwe Coal contracts during the
review period.
COMMENTARY AND OUTLOOK
Management"s focus remains the ongoing refinement of tyre management services
to transporters and mining operators and the strategic expansion of the
distribution of new and retread tyres in sub-Saharan Africa.
To this end the Group"s retail, service and retread outlets are continuously
reviewed to improve locations and upgrade facilities. Opportunities to acquire
operations in regions currently not serviced by the Group or where major
synergies can be achieved are regularly investigated.
In Zambia the 30% minority was acquired in the period under review. Plant to
the value of R3 million is being installed in the Kitwe region to further
improve the retreading service levels provided to the mines and to maintain the
Group"s predominance in the region as the new tyre and mining tyre retreader of
choice.
A new range of Bridgestone retread tread designs was launched towards the end
of June to suit highway, dual-purpose and axle positions and is complimented by
the Maxiprest Compressed Tread Retreading Process.
The foundations laid down in the past provide an opportunity for the company
to refocus on its goals and management is comfortable that the company will
achieve acceptable profits going forward.
DIVIDEND
The Board has elected not to pay an interim dividend as a result of the
current high level of borrowings. The Group"s dividend policy will be reviewed
against future cash flow performance.
CORPORATE GOVERNANCE
For the past three months the Board has spent substantial amounts of its
resources to investigate and settle the SARS issues relating to certain tax
irregularities that took place between 1991 and 2000. As mentioned in the
Directors" Report at 31 December 2002, the Board initiated communication with
the SARS in determining any outstanding liabilities and agreement to the
satisfaction of both parties was reached in July.
In compliance with good corporate governance, the Board of Directors
comprises two independent directors, five non-executive directors and three
executive directors. The independent directors, Messrs Neill Davies and Ray
Hislop, are members of the Remuneration and Audit Committees and chair them
respectively. The Company is committed to conforming to the recommendations of
the King Commission, the regulations as required by the JSE and SARS.
ON BEHALF OF THE BOARD
C E BROWN R S HISLOP
Managing Director Director
Date: 06/08/2003 05:15:35 PM Produced by the JSE SENS Department
