| Thu 11 Dec 2003, 17:08 | | Interim Report For The Six Months Ended 30 Septemb |
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Wesco Investments Limited - Interim Report For The Six Months Ended 30 September
2003 and withdrawal of cautionary announcement
WESCO INVESTMENTS LIMITED(Incorporated in the Republic of South
Africa)Registration number 1968/005871/06JSE code WESISIN ZAE000007928INTERIM
REPORT for the six months ended 30 September 2003
INTRODUCTIONAs previously reported, control of Toyota South Africa (Proprietary)
Limited ("Toyota SA") was disposed of to Toyota Motor Corporation of Japan
("TMC") with effect from 1 July 2002, and Wesco changed its year-end from 31
December to 31 March.
Comparative figures in respect of the six months ended 30 June 2002 and the 15
months ended 31 March 2003 include the consolidation of Toyota SA"s results to
30 June 2002. Wesco"s 25% interest in the results of Toyota SA for the interim
period under review have been included in the line item "Share of associates"
retained income" in the condensed group income statement.
CONDENSED GROUP Unaudited Audited15
INCOME STATEMENT six months months
ended ended
30 Sept. 30 June 31 March
R000 2003 2002 2003
Revenue
Investment income and growth 29 944 62 045 90 594
New motor vehicle, related 4 581 511 4 581 511
component and other sales
Cost of sales (4 553 567) (4 553 567)
Gross profit 29 944 89 989 118 538
Distribution expenses (134 971) (134 971)
Administrative and other (2 109) (119 770) (121 844)
expenses
Surplus on disposal of 174 766
interest in a subsidiary
company
Operating income (loss) 27 835 (164 752) 36 489
Finance costs (133 411) (135 686)
Share of associates" retained 108 382 12 067 49 522
income
Income (loss) before taxation 136 217 (286 096) (49 675)
Taxation (42 483) 114 559 69 285
Income (loss) after taxation 93 734 (171 537) 19 610
Minority interests (727) 65 150 64 660
Net income (loss) attributable 93 007 (106 387) 84 270
to Wesco shareholders
Per share analysis - in cents
Earnings 1 102 (1 260) 998
Adjustments for headline
earnings:
Surplus on disposal of (2 070)
interest in a subsidiary
company
Profit on disposal of (16)
investments and property,
plant and equipment
Headline earnings 1 102 (1 260) (1 088)
Dividends 220 200 200
Cash payment 5 500
CONDENSED GROUP Unaudited Audited15
six months months
ended ended
CASH FLOW STATEMENT
30 Sept. 30 June 31 March
R000 2003 2002 2003
Net cash inflow (outflow) 2 970 153 939 (504 659)
in operating activities
Net cash from (used in) (150 169) (560 288) 989 138
investing activities
Net cash from (used in) 369 696 (44 656)
financing activities
Increase (decrease) in cash (147 199) (36 653) 439 823
and cash equivalents
CONDENSED GROUP Unaudited Audited
BALANCE SHEET
30 Sept. 30 June 31 March
R000 2003 2002 2003
Assets
Non-current assets 995 012 2 736 319 771 929
Property, plant and equipment 3 900 1 699 333 3 768
Investments in associates 991 112 298 867 768 161
Deferred tax assets 181 158
Other non-current assets 556 961
Current assets 302 927 2 155 231 450 120
Total assets 1 297 939 4 891 550 1 222 049
Equity and liabilities
Capital and reserves 1 261 610 1 460 995 1 186 120
Minority interest 6 185 726 123 5 757
Interest bearing borrowings 237 213
Current liabilities 30 144 2 467 219 30 172
Total equity and liabilities 1 297 939 4 891 550 1 222 049
Net asset value per share 14 945 17 307 14 051
(cents)
Number of ordinary shares in 8 441.8 8 441.8 8 441.8
issue (000)
STATEMENT OF Unaudited Audited15
CHANGES IN EQUITY six months months
ended ended
30 Sept. 30 June 31 March
R000 2003 2002 2003
Share capital
Balance at beginning and end 11 752 11 752 11 752
of the period
Non-distributable reserve 782 151 415 596 709 916
Balance at beginning of the 709 916 359 160 359 160
period
Net gains not recognised in 24 793 25 677
the income statement
Dilution of interest in (1 450)
associate
Movement in associates" 1 055 (667)
reserves
Transfers from retained 71 180 31 643 327 196
earnings
Retained earnings 467 707 1 033 647 464 452
Balance at beginning of the 464 452 1 188 561 1 188 561
period
Net income (loss) 93 007 (106 387) 84 270
Dividends paid (18 572) (16 884) (16 884)
Cash payment (464 299)
Transfers to non- (71 180) (31 643) (327 196)
distributable reserves
Total capital and reserves 1 261 610 1 460 995 1 186 120
Notes 1. Accounting policiesThese group interim financial statements are
prepared in accordance with AC127 Interim Financial Reporting and South African
Statements of Generally Accepted Accounting Practice. The accounting policies
are consistent with those used in the annual financial statements for the period
ended 31 March 2003.
2. AssociatesThese results incorporate Wesco"s share of Interest
the
results of the following associates:
(%)
Toyota SA 25.00
Metair Investments Limited ("Metair") 40.05
Metair"s financial year-end is 31 December.Wesco"s results incorporate Metair"s
results for the six months ended 30 June 2003.
3. CommitmentsThe company is committed in terms of a shareholders" agreement to
purchase additional equity share capital in its associate, Toyota SA, in order
to fund the latter"s capital requirements. The balance of the original
commitment of R300 million amounts to R150 million.
4. ComparativesComparative amounts in the condensed group income statement have
been restated by re-classifying "Investment income and growth" as "Revenue", in
order to provide a better appreciation of the results and operations of the
group.COMMENTResultsWesco"s results have improved significantly on the first six
months of the previous financial year, as advised in the company"s Trading
Statement and Cautionary Announcement published in the press on 18 November
2003.
Headline earnings improved from a loss of 1 260 cents per share in the
comparative period to a profit of 1 102 cents per share in this interim period,
which is the combined result of significantly better performances by both Toyota
SA and Metair.
Operational reviewTotal local vehicle sales as reported by NAAMSA increased by
3.5% to
276 131 units during the nine months ended 30 September 2003 compared to the
same period of the previous year. Total passenger vehicle sales rose by 4.4%.
During the same period Toyota SA"s market share increased from 21.4% to 26.0%,
and its passenger vehicle sales grew by 39.3% to 44 663 units.
During the interim period under review Toyota SA"s turnover increased by 45.8%
to R6 680 million compared to the six months ended 30 June 2002. Favourable
exchange rates on imports, cost reduction programmes as well as lower funding
requirements and lower interest rates contributed to profitability. Net income
after tax improved from a loss of R183 million to a profit of R217 million.
As disclosed in its interim report for the six months ended 30 June 2003,
Metair"s turnover continued to grow as a result of new Original Equipment
contracts introduced in 2002, and improved aftermarket sales. Total turnover was
higher by 32.9%. Margins benefited from reduced import costs as a result of
favourable exchange rates, although somewhat offset by reduced export
profitability. Headline earnings increased by 82.4%.
InvestmentsDuring April 2003 Wesco and TMC invested R600 million in Toyota SA by
way of equity capital, in proportion to their respective shareholding, in order
to fund capital expansion. Wesco"s contribution amounted to R150 million.
ProspectsReduced interest rates and positive inflationary data are expected to
sustain the domestic vehicle and replacement markets.
Toyota SA has returned to profitability and is expected to remain so during the
next six months. Metair"s earnings for the full year should comfortably exceed
those of the previous year, although not at the excellent growth rate
experienced in the first six months.
GovernanceCorporate governanceAs part of its comprehensive review of corporate
governance practices being undertaken, the company has implemented the
undermentioned disciplines in accordance with the recommendation of the King
Report on Corporate Governance for South Africa 2002 and the recently revised
Listings Requirements of the JSE Securities Exchange South Africa :
A Board Charter
Separate Audit and Remuneration Committees, comprising non-executive directors,
with appropriate Terms of Reference
Separate policies detailing procedures relating to board appointments and
evidencing a clear division of responsibilities to ensure a balance of power and
authority so that no one individual has unfettered powers of decision making.
The company"s compliance with the principles set out in the King Code on
Corporate Governance will be detailed in the 2004 annual report.
DirectorateMr. Pieter Robinson was appointed to the board as a non-executive
director with effect from 1 September 2003. Mr. Robinson has also been appointed
as chairman of the Audit and Remuneration Committees with effect from 11
December 2003.
Mrs. Elisabeth Bradley, who reaches Wesco"s retiring age for employees on 28
December 2003, will relinquish her position as executive chairman as at 31
December 2003 but will continue in the office of chairman of the board as non-
executive director with effect from 1 January 2004.
Mr. Gerrit Strydom, executive director (Finance), has been appointed chief
executive officer of the company with effect from 1 January 2004.
DividendIt is Wesco"s policy to declare only an annual dividend in respect of a
full year"s earnings. A preliminary profit and dividend announcement is expected
to be published in the second half of May 2004.
Withdrawal of Cautionary AnnouncementWith publication of this interim report the
Cautionary Announcement, which appeared in the press as part of the company"s
Trading Statement on 18 November 2003, is accordingly withdrawn.
On behalf of the Board
E Le R Bradley GJ STRYDOMExecutive
Chairman Director
Johannesburg11 December 2003
WESCO INVESTMENTS LIMITED(Incorporated in the Republic of South
Africa)Registration number 1968/005871/06JSE code WESISIN ZAE 000007928
DirectorateExecutive directors: E Le R Bradley (Executive Chairman), GJ Strydom
(Finance)
Non-executive directors: RS Broadley, AD Plummer (British), PR Robinson
Company SecretaryFDW Peachey
Registered officeWesco House, 10 Anerley Road, Parktown, JohannesburgTelephone
011 646 3011Facsimile 011 646 3022
Postal addressPO Box 2077, Saxonwold 2132
RegistrarComputershare Limited, Investor Services Division, 70 Marshall Street,
Johannesburg(PO Box 61051, Marshalltown 2107)
SponsorLPC Manhattan Sponsors (Pty) Ltd, 4th Floor, South Office Tower,Hyde Park
Shopping Centre, Hyde Park, Johannesburg(PO Box 41966, Craighall 2024)
Auditors PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill
Johannesburg(Private Bag X36, Sunninghill 2157)
Date: 11/12/2003 05:01:08 PM Produced by the JSE SENS Department
