| Thu 4 Mar 2004, 15:05 | | UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED |
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TIGER WHEELS LIMITED : UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2003
TIGER WHEELS LIMITED
(Incorporated in the Republic of South Africa)
Registration No. 1970/011662/06
Share Code: TIW / ISIN code ZAE 000007407
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
Unaudited Unaudited
at at Audited
31 December 31 December at
30 June
TIGER WHEELS LIMITED 2003 2002 2003
BALANCE SHEET R"000 R"000 R"000
-------------
ASSETS
Non-current assets 783,072 725,134 799,145
--------- --------- --------
Property, plant and equipment 767,509 692,959 774,447
Goodwill 4,320 4,945 4,528
Investment in associates 0 3,860 6,333
Deferred taxation 325 0 2,405
Financial assets 10,918 23,370 11,432
Current assets 1,088,064 967,977 988,863
--------- --------- --------
Inventories 445,227 429,400 424,565
Trade and other receivables 460,979 499,175 494,851
Bank and cash balances 181,858 39,402 69,447
--------- --------- ---------
TOTAL ASSETS 1,871,136 1,693,111 1,788,008
--------- --------- ---------
EQUITY AND LIABILITIES
Shareholders" equity 744,774 720,034 736,238
--------- --------- ---------
Shareholders" funds 633,401 632,008 643,286
Minority interest 111,373 88,026 92,952
Interest-bearing debt 411,197 385,122 367,657
--------- --------- ---------
Long-term debt 297,621 285,538 259,744
Current portion of long-term
debt 81,269 78,653 85,014
Short-term borrowings 32,307 20,931 22,899
Interest-free liabilities 715,165 587,955 684,113
--------- --------- ---------
Trade and other payables 715,165 583,052 674,566
Deferred taxation 0 4,903 0
Current taxation 0 0 9,547
--------- --------- ---------
Total equity and liabilities 1,871,136 1,693,111 1,788,008
--------- --------- ---------
Net tangible asset value per
share (cents) 1,059 1,056 1,075
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
% Change
2003 2002 2003
R"000 R"000 R"000
INCOME STATEMENT
----------------
Revenue 9.1% 1,528,974 1,400,846 2,952,523
--------- --------- ---------
Operating income (10%) 86,893 96,505 219,064
Net financing costs (11,180) (29,270) (52,656)
(Loss)/income from associates 0 (779) (272)
--------- --------- ---------
Profit before taxation 75,713 66,456 166,136
Taxation (23,654) (9,203) (15,072)
--------- --------- ---------
Profit after taxation 52,059 57,253 151,064
Minority interest (6,431) (7,877) (36,158)
--------- --------- ---------
Earnings attributable to
ordinary shareholders (7.6%) 45,628 49,376 114,906
--------- --------- ---------
Reconciliation of headline
earnings per share (cents)
Attributable earnings per
share 76.8 83.2 192.6
Adjusted for :
- Goodwill amortised 0.2 0.5 (2.1)
- Write-down of investments
/loans 0 0 11.1
- Impairment of fixed assets 0 0 18.3
- Sale of investments 2.8 (4.7) (4.7)
----- ----- -----
Headline earnings per share
(cents) 1% 79,8 79.0 215,2
----- ----- -----
Number of shares in issue
(`000)
- At end of period 59,416 59,415 59,416
- Weighted average 59,416 59,356 59,648
STATEMENT OF CHANGES IN EQUITY
------------------------------ Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Equity at beginning of period
As previously stated 643,286 675,194 675,194
Change in accounting policy 0 (4,564) (1,889)
--------- --------- ---------
Restated equity at beginning of
period 643,286 670,630 673,305
Changes in
Share capital, premium and reserves 0 (10,931) (10,931)
Non-distributable reserves (25,191) (56,297) (112,717)
Accumulated profit 15,306 28,606 93,629
--------- --------- ---------
Earnings attributable to ordinary
shareholders 45,628 49,376 114,906
Capitalisation award and dividend (30,322) (21,549) (21,549)
Associated companies 0 779 272
--------- --------- --------
Equity at end of period 633,401 632,008 643,286
--------- --------- ---------
SEGMENTAL ANALYSIS Unaudited Unaudited
---------------- six months ended six months ended
31 December 2003 31 December 2002
ATS Balance Total ATS Balance Total
group of group of
group group
Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 959 228 1,187 899 258 1,157
Wholesale 26 219 245 64 98 162
Retail 0 207 207 0 187 187
Group services
and inter-group
eliminations (23) (87) (110) (17) (88) (105)
----- ----- ----- ----- ----- -----
Total revenue 962 567 1,529 946 455 1,401
----- ----- ----- ----- ----- -----
Operating income
Manufacturing 63 3 66 54 26 80
Wholesale (2) 7 5 (8) 3 (5)
Retail 0 22 22 0 19 19
Group services
and inter-group
eliminations (11) 5 (6) (2) 4 2
----- ----- ----- ----- ----- -----
Total operating income
50 37 87 44 52 96
----- ----- ----- ----- ----- -----
Net financing costs 5 6 11 9 20 29
Interest-bearing debt 264 147 411 225 160 385
Capital expenditure 77 5 82 93 19 112
Depreciation 31 17 48 37 21 58
Future capital
commitments approved 76 13 89 140 18 158
SEGMENTAL ANALYSIS Audited year ended 30 June 2003
----------------
ATS group Balance Total
of group
Rm Rm Rm
Revenue
Manufacturing 1,999 495 2,494
Wholesale 94 197 291
Retail 0 368 368
Group services (47) (153) (200)
----- ----- -----
Total revenue 2,046 907 2,953
----- ----- -----
Operating income
Manufacturing 172 42 214
Wholesale (9) 6 (3)
Retail 0 32 32
Group services (15) (9) (24)
----- ----- -----
Total operating income 148 71 219
----- ----- -----
Net financing costs 17 36 53
Interest-bearing debt 248 120 368
Capital expenditure 241 98 339
Depreciation 82 42 124
Future capital commitments approved 175 16 191
CASH FLOW STATEMENT
------------------- Unaudited Unaudited
six months six months Audited
ended ended year
31 December 31 December ended
30 June
2003 2002 2003
R"000 R"000 R"000
Cash flows from
Operating activities 145,845 132,550 381,995
Investing activities (77,361) (75,626) (292,484)
Financing activities 34,519 (53,555) (58,053)
--------- -------- ---------
Movement in cash resources 103,003 3,369 31,458
Cash resources at beginning of
period 46,548 15,102 15,090
--------- --------- ---------
Cash resources at end of period 149,551 18,471 46,548
--------- --------- ---------
Comprising :
Bank and cash balances 181,858 39,402 69,447
Short-term borrowings (32,307) (20,931) (22,899)
--------- --------- ---------
149,551 18,471 46,548
FOREIGN EXCHANGE RATES
Unaudited
six months Unaudited Audited
ended six months year
31 December ended ended
31 December 30 June
2003 2002 2003
Euro / Rand
End of period rate (balance sheet) 8.05 8.76 8.44
Average rate (income statement) 7.93 9.63 9.11
Euro / Zloty
End of period rate (balance sheet) 4.72 4.02 4.46
Average rate (income statement) 4.59 4.04 4.17
COMMENTS
Nature of business
Tiger Wheels Limited ("Tiwheel") is a group of companies focused on the
automotive aluminium wheel and passenger car tyre industries. The group
operates internationally, with wheel manufacturing plants in Germany, Poland,
South Africa, and the USA, and wholesale wheel and tyre distribution in the
United Kingdom and South Africa.
The group"s 37 Tiger Wheel & Tyre retail stores in Southern Africa (27 owned and
10 franchised) cover all major centres and hold a significant share of the
replacement passenger tyre and wheel business in the region.
Results
In spite of the strong Rand (which appreciated by 20% against the Euro), and
notwithstanding the fact that more than 80% of the group"s revenue was non South
African-based, Tiwheel achieved its goal of maintaining revenues and headline
earnings per share, in Rand, compared with the corresponding period in the
previous year.
The ATS Beteiligungs GmbH ("ATS") group, in which Tiwheel has a 74% interest,
increased operating income by 40% in Euro terms, excluding the R23 million
losses arising on the commissioning of the new wheel manufacturing plant in the
USA. Initial production in the USA started in September 2003. Whilst start-up
losses were higher than budgeted, the plant is currently breaking even at
operating level. The manufacturing plants in Germany and Poland both performed
ahead of budget.
The 100% owned Babelegi plant, TSW Manufacturing (Pty) Ltd ("TSWM") was most
affected by the exchange rate movement. With 90% of its revenues in foreign
currencies, operating income was down from R26 million to R3 million, and a net
loss was incurred after interest. This is notwithstanding efficiency
improvements, such as higher output and a lower reject rate.
The increased sales in the wholesale division, as reflected in the segmental
analysis, is due to the consolidation of the UK wheel and tyre wholesale
distribution business (Yokohama HPT Ltd ("YHPT")) for the first time - as it is
now a subsidiary due to an additional 13% which was acquired in July 2003.
However, the star performer of the wholesale division was Yokohama Southern
Africa (Pty) Ltd ("YSA"), which increased its market share in South Africa and
significantly improved its profit performance. Tiwheel has disposed of its TSW
wholesale distribution in Germany and is in the process of closing its wholesale
business in Belgium. ATS has also reduced its wholesale aftermarket business,
as shown in the segmental analysis.
With price deflation and a generally competitive market, the South African
retail business, Tiger Wheel & Tyre (Pty) Ltd, slightly increased its revenue
and income.
The group"s tax rate is higher - mainly due to the losses in the USA and TSWM
not being able to be set off against other taxpaying entities and a claim from
SARS for R6,1 million for tax relating to a prior period. Although the latter
has been provided for in full, it is being disputed.
The group"s balance sheet reflects an excellent positive cash flow during the
period, particularly considering the investment in the US manufacturing plant.
Net gearing has reduced from 48% to 35%, which, together with lower interest
rates and the impact of AC133, has served to reduce total finance costs.
Future prospects
The order book in the group"s wheel manufacturing businesses is inconsistent for
the next few months, mainly because certain large orders for the delayed launch
of new models were deferred and automotive markets worldwide are weak. Whilst
margins continue to be under pressure, the increase in the paint plant capacity
in Poland (which should be finalised by mid-year) should further improve
Poland"s efficiency and lead to more direct deliveries from the Polish plant to
its customers. As referred to above, the US plant is targeting a credible
operating breakeven before finance costs for the current half year. In
Babelegi, the strong Rand has seriously affected the business as more than 90%
of the output is directly or indirectly for export and is sold in international
currencies. TSWM is in
the process of negotiating a reduction of its workforce by about 110 people -
equivalent to 13% of their total personnel.
Also as a consequence of the exchange rate, management is focussing Babelegi on
longer-run OEM business in order to achieve higher output with fewer people.
Now that the American plant is operating at breakeven before finance costs, the
group is aggressively and seriously looking at the most vigorous automotive
growth market of this decade - China. Whereas six years ago, China"s annual car
manufacturing output was similar to that of South Africa, i.e. 250,000 vehicles
per annum, by 2010 it is generally estimated that China will be the third
largest auto manufacturing country in the world, behind Japan and the USA. All
of ATS" customers have, or are about to, set up production in China, where they
are also budgeting for a high percentage of aluminium wheel fitment. ATS is
fortunate in that it has been invited by some of the largest and most
prestigious of the Chinese motor industry players to enter into joint venture
discussions, which if successfully concluded, will fast track an investment in a
wheel manufacturing plant in China.
The wholesale operations, YSA and YHPT, and the retail business, Tiger Wheel and
Tyre (Pty) Ltd, are cautiously optimistic of maintaining reasonable results.
In summary, and subject to exchange rate movements, the group expects to reflect
headline earnings per share for the full year similar to that achieved last
year.
Termination of cautionary announcements
Shareholders are referred to the cautionary announcements published on SENS on
30 June, 20 October, 27 October, 19 November and 29 December 2003 ("the
announcements"). Negotiations detailed therein, regarding a possible offer for
the disposal of the group"s OEM wheel manufacturing businesses, were terminated
by the company as announced on 17 February 2004.
Shareholders were further advised that agreement has been reached in principle
to realise the long held ambition of the company to create a uniform global
ownership and management structure for these operations. In terms of this "in
principle" agreement the shareholding of TSWM will be restructured so that the
German minority shareholder in ATS will have an equal and like investment in
both companies ("the transaction").
Currently, Tiwheel owns 100% of TSWM and 74% of ATS. The preferred structure
would be to house all the manufacturing interests in ATS. However, this will be
subject to approval by the South African Reserve Bank and other regulatory
bodies.
Due to the increasing globalisation of the group"s activities, and as part of an
agreed succession plan, the Tiwheel Board is to be re-structured.
An agreement in principle has also been reached for the employment contract of
the incumbent CEO, Mr Siegfried F. Teichert to be extended for a further three
years, and will include a period for the induction of a successor. Mr Teichert,
the architect and driver of the ATS Group"s growth in the OEM wheel business
over the last 15 years, will be responsible for the total global manufacturing
business, including the fully integrated Babelegi operation.
A small portion of the property which houses the main production facility in
Werdohl, Germany, still belongs to the founding families and will be purchased
by ATS.
While the successful implementation of the transaction should further enhance
the long-term prospects of Tiwheel, it will have no material impact on equity or
earnings in the short term.
Accounting policies
The results for the half-year have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. The accounting
policies used are consistent with those used in the financial statements for the
year ended 30 June 2003.
Dividend
It is company policy to declare an annual dividend at the year-end.
On behalf of the board
Eddie Keizan Martin Glatt
Joint chairman and CEO Joint chairman
Johannesburg
4 March 2004
Directors: Eddie Keizan (Joint chairman & CEO), Martin Glatt*(Joint chairman),
Rainer Hagemann** (German), Josh Loots, Mike Groves**, Keith Rivers, Siegfried
Teichert (German)
* Non-executive
** Independent non-executive
Company secretary: Marco Nel (marcon@tsw.co.za)
Registered office: Cnr Old Pretoria Road and K101, Midrand 1685, Telephone (011)
256 4500, Fax (011) 256 4515
Transfer secretaries: Computershare Limited, Registration number 2000/006082/06,
70 Marshall Street, Marshalltown 2001, PO Box 61051, Marshalltown 2107,
Telephone (011) 370 5000
Sponsor: Sasfin Corporate Finance, a division of Sasfin Bank Limited,
Registration number 1951/002280/06
www.tiwheel.co.za
Date: 04/03/2004 02:00:10 PM Produced by the JSE SENS Department
