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Metair -
METAIR INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration number (1948/031013/06)
Share code: MTA
ISIN code: ZAE000004743
Interim Report for the 6 months ended 30 June 2003
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June % 30 June 31 December
2003 Change 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Sales 949 405 32,9 714 285 1 612 836
Cost of sales (689 900) (28,3) (537 645) (1 238 602)
Gross profit 259 505 46,9 176 640 374 234
Other operating income 7 515 32,8 5 660 7 060
Distribution, (134 389) (24,5) (107 963) (217 861)
administrative and other
expenses
Operating profit 132 631 78,4 74 337 163 433
Depreciation and (19 044) (42,1) (13 399) (31 270)
amortisation
Fair value adjustments on (720)
financial instruments
Finance costs (8 783) (17,6) (7 467) (15 109)
Share of results of 2 508 (35,1) 3 861 7 908
associates
Profit before tax 106 592 85,9 57 332 124 962
Tax (33 020) (72,8) (19 108) (36 627)
Net profit 73 572 92,5 38 224 88 335
Dividend (29 490) (26 509) (26 508)
Retained earnings for the 44 082 11 715 61 827
period
-
Earnings per share (cents 1 247 90,1 656 1 512
Loss/(profit) on disposal (5) (120,0) 25 27
of property, plant and
equipment
Headline earnings per 1 242 82,5 681 1 539
share (cents)
Dividend per share 500 9,9 455 455
(cents)
Weighted number of 5 898 5 826 5 841
ordinary shares in issue
(`000)
GROUP CASH FLOW STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Net cash available from 121 571 4 594 77 283
operating activities
Net cash used in investing (36 235) (44 209) (83 859)
activities
Net cash inflow from 714 5 148 49 099
financing activities
Increase/(decrease) in cash 86 050 (34 467) 42 523
and cash equivalents
Net cash
At beginning of period 12 846 (29 677) (29 677)
At end of period 98 896 (64 144) 12 846
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Non-
Capital distri-
and Retained Hedging butable
Premium Earnings reserve reserves Total
R"000 R"000 R"000 R"000 R"000
Balance at 1 34 165 517 400 30 802 582 367
January 2003
Net profit 73 572 73 572
Dividend (29 490) (29 490)
Hedging reserve (946) (946)
Transfer to non- (2 508) 2 508
distributable
reserve
Balance at 30 June 34 165 558 974 (946) 33 310 625 503
2003
Accounting policies
These consolidated condensed interim financial statements are prepared in
accordance with AC127 Interim Financial Reporting and Statements of Generally
Accepted Accounting Practice in South Africa. The accounting policies used in
the preparation of the interim financial statements are consistent with those
used in the annual financial statements for the year ended 31 December 2002.
Contingencies
The bank and other guarantees given by the Group to third parties amounted to
R40,7 million as at 30 June 2003 (R48,7 million as at 30 June 2002).
Borrowings 30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Current 14 611 4 887 14 640
Non-current 87 155 60 539 78 256
101 766 65 426 92 896
The movement in borrowings can be analysed as follows:
Six months ended June 2003
Opening amount (92 896)
Repayments 7 083
Amounts raised (15 953)
Closing amount (101 766)
Fair value adjustments on financial instruments 30 June
2003
R"000
Foreign exchange gains/(losses) arising from:
Forward exchange contracts and other financial instruments 555
Translation of foreign currency monetary items (1 275)
Total (720)
GROUP BALANCE SHEETS
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Assets
Non-current assets 371 258 327 310 353 038
Property, plant and 297 546 257 900 279 999
equipment
Intangible assets 2 790 3 179 2 971
Investments:
- associates 34 415 29 304 33 351
- other 36 507 36 927 36 717
Current assets 647 010 514 706 554 804
Inventories 262 939 261 888 281 383
Receivables and 285 175 252 818 260 575
prepayments
Cash and cash equivalents 98 896 0 12 846
Total assets 1 018 268 842 016 907 842
EQUITY AND LIABILITIES
Capital and reserves 625 503 529 912 582 367
Share capital and premium 34 165 31 822 34 165
Retained earnings and 591 338 498 090 548 202
reserves
Non-current liabilities 103 674 68 137 91 626
Interest bearing 87 063 60 539 78 256
borrowings
Non interest bearing 92
borrowings
Deferred taxation 16 519 7 598 13 370
Current liabilities 289 091 243 967 233 849
Borrowings 14 611 4 887 14 640
Bank overdraft 0 64 144 0
Provisions for 17 659 15 101 24 428
liabilities and charges
Other current liabilities 256 821 159 835 194 781
Total liabilities 392 765 312 104 325 475
Total equity and 1 018 268 842 016 907 842
liabilities
Net asset value per share 10 605 9 096 9 970
(cents)
Capital expenditure 36 939 44 674 85 928
Capital commitments
- contracted 11 498 37 179 20 857
- authorised but not 32 633 17 904 18 210
contracted
COMMENTS
Sales of new passenger vehicles were similar to those of the first six months of
2002, light commercial vehicles declined by 4% and vehicle export volumes were
very close to those of the first half of 2002.
Component export programmes had some momentum from the previous year but margins
were directly impacted by the stronger Rand exchange rate and a surplus of
export credits reduced the benefit to component manufacturers. The aftermarket
showed some growth (particularly automotive batteries) and margins benefited
from the cheaper cost of imported subcomponents and raw materials.
Demand from the mining industry for traction batteries and caplamps increased
compared to 2002. Standby and solar markets were weak and whilst higher unit
volumes were achieved for surface motive power batteries, these were mainly in
export markets where margins were lower.
OPERATING RESULTS
The turnover growth experienced in the second half of 2002 as a result of new OE
contracts introduced in the fourth quarter, continued into 2003. Sales into the
aftermarket increased by almost 20% but export volumes declined substantially.
Compared to the first six months of the previous year, total turnover increased
by 32,9% and compared to the second six months of 2002 by 5,6%. Production at
these higher levels stabilised and headline earnings per share increased to 1
242 cents per share compared to the 681 cents achieved in the first six months
and 858 cents per share achieved in the second six months of 2002.
The higher activity levels, reduced subcomponent import costs and efficiency
improvements increased operating margins, particularly in the domestic
replacement market, but export margins declined due to the strong Rand. The
favourable sales mix also contributed to this margin improvement. Interest costs
were slightly higher than the comparable period of 2002 reflecting higher
interest rates and slightly increased lease commitments.
The Balance Sheet reflects very positive cash flows with current assets being
well controlled. Longer term debt (used to fund capital expenditure) increased
to R87,1 million - an increase of R8,8 million compared to December 2002.
However, cash reserves amounted to R98,9 million at the end of June 2003 and
interest cover increased from 9 to 13 times. Shareholders" equity represented
61,4% of total assets compared to 62,9% at June 2002.
FORECAST
The interest rate reduction in June with further reductions expected in the
second six months, should sustain the domestic vehicle and replacement markets.
If the current strength of the Rand continues, export margins and volumes will
remain under pressure and some business may have to be curtailed. Domestic
margins will reduce as imported cost savings are passed on to customers.
The projected earnings for the second six months of 2003 are expected to be less
than the very positive results achieved in the first six months but earnings for
the full year should comfortably exceed those of the previous year. In the
medium term, new business either secured or currently under negotiation will
require further capital expenditure of approximately R150 to R200 million to
expand manufacturing facilities. The main impact of this new business will only
be felt in 2005 and the capital expenditure will be financed mainly from
internal cash flows.
Signed on behalf of the board
E Le R BRADLEY - Chairman
A D PLUMMER - Managing Director
REGISTRARS
Computershare Limited
Investor Services Division
70 Marshall Street
Marshalltown
JOHANNESBURG
2107
JOHANNESBURG, 25 August 2003
DIRECTORS: E le R Bradley (Chairman); R S Broadley; A D Plummer (Managing)*; L
Soanes*; G J Strydom; C I J van der Merwe (Finance) *British
COMPANY SECRETARY: S M Vermaak
Date: 25/08/2003 05:15:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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