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METAIR INVESTMENTS LIMITED - INTERIM REPORT FOR THE 6 MONTHS ENDED 30 JUNE 2004
METAIR INVESTMENTS LIMITED(Incorporated in the Republic of South Africa)
(Reg.No. 1948/031013/06)
Share code: MTA
ISIN Code: ZAE 000004743
Interim Report for the 6 months ended 30 June 2004
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June % 30 June 31 December
2004 Change 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Sales 914 847 (3,6) 949 405 1 854 208
Cost of sales (658 832) 4,5 (689 900) (1 390 493)
Gross profit 256 015 (1,3) 259 505 463 715
Other operating income 12 633 68,1 7 515 14 543
Distribution, administrative (128 622) 4,3 (134 389) (237 545)
and other expenses
Operating profit 140 026 5,6 132 631 240 713
Depreciation and (24 320) (27,7) (19 044) (41 977)
amortisation
Fair value adjustments on (1 402) (94,8) (720)
financial instruments
Finance costs (2 414) 72,5 (8 783) (8 834)
Share of results of (262) (110,4) 2 508 5 395
associates
Profit before tax 111 628 4,7 106 592 195 297
Tax (34 991) (6,0) (33 020) (59 300)
Profit after tax before 76 637 4,2 73 572 135 997
minority interest
Minority interest (344) (191)
Net profit 76 293 3,7 73 572 135 806
Dividend (41 552) (40,9) (29 490) (29 490)
Retained earnings for the 34 741 (21,2) 44 082 106 316
period
Earnings per share
Basic earnings per share 1 282 2,8 1 247 2 303
(cents)
Loss/(profit) on disposal of 5 (195,1) (5) (6)
property, plant and
equipment
Headline earnings per share 1 287 3,6 1 242 2 297
(cents)
Diluted earnings per share
Basic earnings per share 1 256 2,8 1 222 2 240
(cents)
Headline earnings per share 1 261 3,6 1 217 2 234
(cents)
Dividend per share (cents) 700 40,0 500 500
Weighted number of ordinary 5 949 5 898 5 898
shares in issue (`000)
Adjustment for dilution due 125 123 164
to share options (`000)
Weighted number of ordinary 6 074 6 021 6 062
shares in issue used for
dilution calculation (`000)
GROUP CASH FLOW STATEMENTS
Six months ended Year ended
31
December200
3
R`000
Audited
30 June 30 June
2004 2003
R`000 R`000
Unaudited Unaudited
Net cash available from 86 626 121 571 203 127
operating activities
Net cash used in investing (67 906) (36 235) (98 641)
activities
Net cash (outflow)/inflow from (6 506) 714 6 279
financing activities
Increase in cash and cash 12 214 86 050 110 765
equivalents
Net cash
At beginning of period 123 611 12 846 12 846
At end of interim period 135 825 98 896 123 611
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Non-
capital distri-
and Treasury Retained Hedging butable
premium shares earnings reserve reserves Total
R`000 R`000 R`000 R`000 R`000 R`000
Balance at 1 34 165 622 172 (2 864) 32 346 685 819
January 2004
Net profit 76 293 76 293
Ordinary 984 984
shares issued
Treasury (312) (312)
shares
Share Trust 628 628
retained
earnings
Dividends (41 552) (41 552)
Hedging 2 864 2 864
reserve
Transfer to 10 847 (10 847)
non-
distributable
reserve
Balance at 30 35 149 (312) 668 388 0 21 499 724 724
June 2004
GROUP BALANCE SHEETS
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Assets
Non-current assets 445 817 371 258 417 461
Property, plant and equipment 376 235 297 546 337 940
Intangible assets 1 862 2 790 2 528
Investments:
- associate companies 31 633 34 415 34 835
- other investments 36 087 36 507 36 297
Deferred taxation 5 861
Current assets 659 219 647 010 610 250
Inventories 241 958 262 939 259 607
Receivables and prepayments 281 436 285 175 227 032
Cash and cash equivalents 135 825 98 896 123 611
Total assets 1 105 036 1 018 268 1 027 711
EQUITY AND LIABILITIES
Capital and reserves 724 724 625 503 685 819
Share capital and premium 35 149 34 165 34 165
Hedging reserve (2 864)
Treasury Shares (312)
Retained earnings and reserves 689 887 591 338 654 518
Minority interest 450 191
Total shareholders` funds 725 174 625 503 686 010
Non-current liabilities 101 516 103 674 109 499
Interest bearing borrowings 80 036 87 063 84 481
Non interest bearing borrowings 92
Deferred taxation 21 480 16 519 25 018
Current liabilities 278 346 289 091 232 202
Borrowings 11 565 14 611 14 694
Taxation 16 073
Provisions for liabilities and 21 304 17 659 26 732
charges
Other current liabilities 245 477 256 821 174 703
Total liabilities 379 862 392 765 341 701
Total equity and liabilities 1 105 036 1 018 268 1 027 711
Net asset value per share 12 190 10 605 11 631
(cents)
Capital expenditure 64 506 36 939 85 928
Capital commitments
- contracted 38 488 11 498 20 857
- authorised but not contracted 18 129 32 633 18 210
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTSAccounting
policiesThese 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 2003,
except for the consolidation of the Share Trust in terms of AC132.
Contingencies The bank and other guarantees given by the Group to third parties
amounted to R40,7 million as at 30 June 2004 (R40,7 million as at 30 June 2003).
Borrowings 30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Current 11 565 14 611 14 694
Non-current 80 036 87 155 84 481
Total 91 601 101 766 99 175
The movement in the borrowings can be analysed as follows:Six months ended June
2004Opening amount (99 175)Repayments 8
923Amounts raised (1 349)Closing amount (91
601)
Fair value adjustments on financial 30 June 30 June 31 December
instruments 2004 2003 2003
R`000 R`000 R`000
Foreign exchange (losses)/gains
arising from:
Forward exchange contracts and other 660 555 684
financial instruments
Translation of foreign currency (2 062) (1 275) (3 548)
monetary items
Total (1 402) (720) (2 864)
OPERATING RESULTSGroup turnover was 3,6% below the first six months of 2003 but
marginally higher than the second six months. Sales to local vehicle
manufacturers declined despite a substantially higher domestic vehicle market
due to increased built up imports and lower vehicle exports. Lower imported
subcomponent costs also resulted in reduced selling prices. Sales into the
aftermarket increased marginally despite strong competition from imported
products, but both automotive component and non-automotive exports declined with
the full impact of the stronger Rand being felt in the second quarter.
Management focused on cost reduction and containment whilst maintaining quality
improvement programmes and managing expansion programmes. Domestic operating
margins improved slightly due to careful management of imported costs but export
margins declined.
Depreciation costs and investment incentives (included in Other operating
income) increased reflecting the substantial capital investments made in 2003.
Financing costs were significantly lower due to reduced interest rates, tight
asset management and positive cash flows.
Net profit increased by 3,7% to R76,3 million and headline earnings per share
increased to 1 287 cents compared to the first six months of 2003.
In terms of the Group policy, no interim dividend was declared. The dividend of
R41,6 million reflected in the six months results is the final dividend of 700
cents per share declared and paid in respect of the 2003 full year results.
On the Balance Sheet, current assets were well controlled with inventories below
June 2003 levels. Despite a substantial increase in property plant and
equipment, the Group was cash positive. Cash reserves amounted to R135,8 million
and long and short term debt reduced by R10,0 million to R91,6 million.
Shareholders equity represented 65,6% of total assets compared to 61,4% at June
2003.
PROSPECTSHistorically low interest rates and stable vehicle prices should
sustain the growth in the domestic vehicle market to achieve a 20 year record
volume. The current strength of the Rand does, however, impose real growth
constraints with export margins and volumes remaining under pressure and
increased competition for domestic business. Imported vehicles now represent
almost 30% of the domestic market and new entrants have been recently announced.
Investments have been made and committed for new facilities and expansion
programmes in preparation for new contracts that will generate additional
turnover from 2005. The positive cash position allows these investments mainly
to be funded internally. Whilst the volume contribution from this new business
is reasonably predictable, the performance of the Rand will have a major impact
on the marginal contribution.
The short term outlook is reasonably positive and with strong domestic demand,
the projected earnings for the group for the second six months of 2004 are
expected to be satisfactory.
Signed on behalf of the board
E Le R BRADLEY - Chairman
A D PLUMMER - Managing Director
JOHANNESBURG, 23 August 2004
REGISTRARS
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Marshalltown
JOHANNESBURG
2107
SPONSOR
LPC Manhattan Sponsors (Pty) Limited
EXECUTIVE directors: A D Plummer (Managing)*; C I J van der Merwe (Finance)
NON-EXECUTIVE directors: E le R Bradley (Chairman); G J StrydomINDEPENDENT NON-
EXECUTIVE DIRECTORS: R S Broadley; L Soanes*COMPANY SECRETARY: S M Vermaak
* British
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