| Thu 2 Sep 2004, 14:33 | | Audited Group Results As At 30 June 2004 |
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Tiger Wheels Limited - Audited Group Results As At 30 June 2004
TIGER WHEELS LIMITED
Registration No. 1970/0011662/06
(Incorporated in the Republic of South Africa)
Share Code: TIW ISIN code: ZAE000007407
(`TIWHEEL`)
As at Restated
30 June 2004 As at
30 June 2003
ABRIDGED BALANCE SHEET R`000 R`000
----------------------
ASSETS
Non-current assets 828,431 820,384
--------- ---------
Property, plant and equipment 801,973 784,970
Trademarks 85 62
Goodwill 12,050 15,343
Investment in associates - 6,333
Other investments 43 20
Financial assets 9,797 11,412
Deferred taxation 4,483 2,244
Current assets 1,123,695 988,651
--------- ---------
Inventories 404,781 424,565
Trade and other receivables 464,569 492,639
Taxation 13,211 -
Bank and cash balances 241,134 69,447
--------- ---------
TOTAL ASSETS 1,952,126 1,807,035
--------- ---------
EQUITY AND LIABILITIES
Shareholders` equity 861,613 745,807
--------- ---------
Capital and reserves 690,595 602,351
Minority interest 171,018 143,456
Non-current liabilities 325,873 269,202
--------- ---------
Interest bearing liabilities 310,938 259,744
Financial liabilities 10,353 -
Deferred taxation 4,582 9,458
Current liabilities 764,640 792,026
--------- ---------
Trade and other payables 592,040 591,304
Provisions 44,396 83,262
Interest bearing liabilities 97,820 85,014
Short term borrowings 19,421 22,899
Taxation 10,963 9,547
--------- ---------
Total equity and liabilities 1,952,126 1,807,035
--------- ---------
Net tangible asset value per share (cents) 1,134 988
As at Restated
% 30 June 2004 As at
Change 30 June 2003
ABRIDGED INCOME STATEMENT R`000 R`000
-------------------------
Revenue 7.8% 3,181,580 2,952,523
--------- ---------
Operating income 4.5% 229,014 219,064
Interest received 23,953 964
Interest paid (31,998) (53,488)
Loss from associates - (272)
--------- ---------
Profit before taxation 32.9% 220,969 166,267
Taxation (44,404) (15,072)
--------- ---------
Profit after taxation 176,775 151,195
Minority interest (35,788) (36,158)
--------- ---------
Earnings attributable to ordinary
shareholders 22.4% 140,777 115,037
--------- ---------
Reconciliation of headline earnings
per share (cents)
Attributable earnings per share 236.9 195.4
Adjusted for :
- Goodwill amortised 0.4 (2.1)
- Write-down of investments/loans - 11.2
- Impairment of fixed assets - 18.5
- Sale of investments 2.6 (4.8)
----- -----
Headline earnings per share (cents) 9.9% 239.9 218.2
----- -----
Free cash flow per share (cents) 190.3 291.0
Proposed dividend per share 71.0 50.0
Number of shares in issue (`000)
- At end of year (net of treasury
shares) 59,842 59,416
- Weighted average 59,423 58,864
ABRIDGED SEGMENTAL Year ended 2004
ANALYSIS
------------------
ATS group Balance of group Total
Europe USA Total Europe SA Total
Rm Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 1,904 97 2,001 - 437 437 2,438
Wholesale 62 - 62 208 236 444 506
Retail - - - - 397 397 397
Group services
and inter-group
eliminations - (23) (23) - (136) (136) (159)
----- ----- ----- ----- ----- ----- -----
Total revenue 1,966 74 2,040 208 934 1,142 3,182
----- ----- ----- ----- ----- ----- -----
Operating income
Manufacturing 218 (40) 178 - 18 18 196
Wholesale 4 - 4 (8) 26 18 22
Retail - - - - 38 38 38
Group services
and inter-group
eliminations (23) 5 (18) - (9) (9) (27)
----- ----- ----- ----- ----- ----- -----
Total operating
income 199 (35) 164 (8) 73 65 229
----- ----- ----- ----- ----- ----- -----
Interest received 1 - 1 1 22 23 24
Interest paid (11) (1) (12) (2) (18) (20) (32)
----- ----- ----- ----- ----- ----- -----
Net financing costs (10) (1) (11) (1) 4 3 (8)
----- ----- ----- ----- ----- ----- -----
Interest-bearing
debt * 142 23 165 13 9 22 187
Capital expenditure 114 28 142 1 37 38 180
Depreciation 54 9 63 1 36 37 100
Future capital
commitment approved 106 26 132 - 38 38 170
Number of employees 1,287 114 1,401 56 1,452 1,508 2,909
* Net on cash on hand
ABRIDGED SEGMENTAL Year ended 2003 (Restated)
ANALYSIS
------------------
ATS group Balance of group Total
Europe USA Total Europe SA Total
Rm Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 1,982 17 1,999 - 495 495 2,494
Wholesale 94 - 94 31 166 197 291
Retail - - - - 368 368 368
Group services
and inter-group
eliminations (47) - (47) - (153) (153) (200)
----- ----- ----- ----- ----- ----- -----
Total revenue 2,029 17 2,046 31 876 907 2,953
----- ----- ----- ----- ----- ----- -----
Operating income
Manufacturing 186 (14) 172 - 42 42 214
Wholesale (9) - (9) (9) 15 6 (3)
Retail - - - - 32 32 32
Group services
and inter-group
eliminations (15) - (15) - (9) (9) (24)
----- ----- ----- ----- ----- ----- -----
Total operating
income 162 (14) 148 (9) 80 71 219
----- ----- ----- ----- ----- ----- -----
Interest received - - - - 1 1 1
Interest paid (16) (1) (17) (1) (36) (37) (54)
----- ----- ----- ----- ----- ----- -----
Net financing costs (16) (1) (17) (1) (35) (36) (53)
----- ----- ----- ----- ----- ----- -----
Interest-bearing
debt * 187 - 187 21 90 111 298
Capital expenditure 105 136 241 - 128 128 369
Depreciation 82 - 82 2 40 42 124
Future capital
commitments approved 126 49 175 - 16 16 191
Number of employees 1,235 13 1,248 11 1,421 1,432 2,680
* Net of cash on hand
ABRIDGED STATEMENT OF CHANGES IN EQUITY
--------------------------------------- As at Restated
30 June 2004 As at
30 June 2003
R`000 R`000
Equity at beginning of year
As previously stated 602,351 673,305
Accounting policy change / prior year
adjustment - (39,029)
--------- ---------
Restated equity at beginning of year 602,351 634,276
Changes in
Share capital 8 (7)
Share premium 6,065 (12,961)
Non-distributable reserves (28,284) (112,717)
--------- ---------
Movement in foreign currency translation
reserve (32,837) (98,095)
Hedging reserve (AC 133) (1,951) (14,350)
Other 6,504 (272)
Accumulated profit 110,455 93,760
--------- ---------
Earnings attributable to ordinary
shareholders 140,777 115,037
Dividend and capitalisation award (30,322) (21,549)
Associated companies - 272
--------- ---------
Equity at end of year 690,595 602,351
--------- ---------
ABRIDGED CASH FLOW STATEMENT
---------------------------- As at Restated
30 June 2004 As at
30 June 2003
R`000 R`000
Cash flows from
Operating activities 295,243 465,385
Investing activities (181,375) (292,484)
Financing activities 63,956 (139,228)
--------- --------
Movement in cash resources 177,824 33,673
Cash resources at beginning of year 46,548 15,090
Foreign entities translation adjustment (2,659) (2,215)
--------- ---------
Cash resources at end of year 221,723 46,548
--------- ---------
Comprising :
Bank and cash balances 241,134 69,447
Short-term borrowings (19,421) (22,899)
--------- ---------
221,713 46,548
--------- ---------
FOREIGN EXCHANGE RATES
---------------------- As at Restated
30 June 2004 As at
30 June 2003
Balance Sheet Rate
Rand / Euro 7.38 8.44
Euro / Pound 1.49 1.44
Dollar / Euro 1.21 1.15
Zloty / Euro 4.52 4.46
Rand / Dollar 6.09 7.35
Rand / Pound 10.98 12.12
Income Statement Rate
Rand / Euro 7.92 9.11
Euro / Pound 1.46 1.51
Dollar / Euro 1.19 1.04
Zloty / Euro 4.65 4.17
Rand / Dollar 6.64 8.74
Rand / Pound 11.56 13.82
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 39 Tiger Wheel & Tyre retail stores in Southern Africa (29 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, and notwithstanding the fact that only a small
portion of the group`s revenue is locally based, Tiwheel achieved an 8% increase
in revenue, a 33% increase in earnings before tax and a 10% increase in headline
earnings per share, in Rand terms, compared with the previous year. Against a
background of currency volatility, uncertainty in the world automotive industry
and competitive pressures, the group was able to grow, and generally improve
efficiencies, to reflect a stronger bottom line.
The ATS Beteiligungs GmbH (`ATS`) group, in which Tiwheel has a 74% interest,
increased operating income by 11% in Rand terms, after incurring R40 million of
start-up losses in the new wheel manufacturing plant in the USA. Our hopes of
breaking even in the second 6 months in the USA were not realised - mainly
because of material timing mismatches between the commissioning of the new plant
and the receipt of customer product approvals to enable the commencement of
sales for which there were firm orders. Delays by certain major customers in the
release of their new models exacerbated the problem. These problems were mostly
resolved by the end of the period under review.
Fortunately the main ATS plant - located in Germany - which has been reorganised
and modernised, was able to produce excellent results, while the Polish plant
maintained its outstanding performance.
The 100% owned Babelegi plant, TSW Manufacturing (Pty) Limited (`TSWM`), was
most affected by the exchange rate movement. With 90% of its revenues in
foreign currencies at international benchmark prices, both revenue and operating
income declined in Rand terms. However, a further significant improvement in
efficiencies was achieved, which is an ongoing process.
The increase in wholesale revenues as reflected in the segmental analysis, is
mainly due to the consolidation of the UK wheel and tyre wholesale distribution
business, Yokohama HPT Limited (`YHPT`), for the first time as it is now a
subsidiary. This followed the acquisition of an additional 13% in July 2003.
YHPT maintained its market position and produced a small profit in the process.
However, the star performer of the wholesale division was Yokohama Southern
Africa (Pty) Limited (`YSA`), which enjoyed the benefits of the stronger Rand,
increasing its market share while, at the same time, effectively controlling its
costs. Tiwheel disposed of its TSW aftermarket wholesale wheel businesses in
Germany and 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, increased its revenue and income
satisfactorily.
The group`s tax rate is higher largely due to the combined effects of not being
able to set off the losses in the USA against other taxpaying entities in the
ATS Group, lower profits in TSWM which currently enjoys a tax holiday and a
claim from South African Revenue Services for R6,1 million for tax relating to a
prior period.
The group`s balance sheet reflects an excellent positive cash flow during the
period - notwithstanding the investment in the US manufacturing plant. Gearing
net of cash reduced from 40% to 23% which, together with lower interest rates
and the impact of AC133, brought a welcome decline in net finance costs. Hence
an increased dividend of 71 cents per share, representing 30% of attributable
earnings, is declared.
Prospects
Restructure of ownership of the manufacturing division
Further to the comments raised in the 6-month profit announcement of 5 March
2004, shareholders are advised that progress has been made in the creation of an
uniform ownership and management structure for the group`s manufacturing
businesses. The preferred structure is to own TSWM (currently 100% directly
owned by Tiwheel) through our existing 74% of ATS. We have only recently
received South African Reserve Bank (`SARB`) approval in principle for this
proposed transaction and are now negotiating the terms with the minority
shareholder and management of ATS. The proposed agreement would be subject to
final approval by the SARB and other regulatory bodies. We believe that the
successful conclusion and implementation of this transaction would further
enhance the long-term prospects of Tiwheel and would have only a small impact on
short-term earnings and equity. An announcement will follow when appropriate.
The general outlook
Given that prospects are obviously dependent on macro economic and political
factors, all of our manufacturing businesses have geared for efficiency
improvements, increased capacity and higher revenues. As far as income is
concerned, `price-down` pressure from new car manufacturers (OEM) on suppliers
is being experienced by all in our industry and we are no exception in feeling
the effects of this trend. We are, therefore, forced to continually re-assess
our manufacturing processes, as well as all aspects of manpower and production
efficiency, to enable us to strive to lower our cost base in real terms.
We are fortunate that our plants are not only modern and highly automated but
are also staffed by committed teams of competent people. We are equally
fortunate that our customers, the top line of international OEM car
manufacturers, require product quality and consistency above all else. We are
able to amortise the cost of R&D over an ever-increasing number of units
produced, thus maintaining the business at the forefront of the industry in
terms of product quality, innovation and performance. The US plant has
established a stable base from which to grow and is budgeting a small loss for
the coming year.
The announcement on 5 March 2004 referred to a proposed stake in a new wheel
manufacturing plant in China. While investigations and negotiations are
continuing, no final commitment has yet been made. The initial timing pressures
from customers to start this venture has diminished, mainly due to the measures
taken by the Chinese government to cool the overheated growth in their economy
in general, and in their automotive industry in particular. As a first step,
however, an agreement has been concluded securing the exclusive distribution
rights for Europe for our prospective partner, who is the largest Chinese OEM
wheel producer.
The YSA wholesale operation, which raised its performance in the past year, is
budgeting for further improvements in the coming year, depending on exchange
rates. The outlook for YHPT in the UK is for a slightly improved result. Tiger
Wheel & Tyre is cautiously optimistic of achieving another year of reasonable
growth to maintain its consistent and outstanding performance record. Black
Economic Empowerment options, both internal and external, are being explored for
the retail business.
In summary, subject to exchange rate movements and based on the current global
economic and political environment, the group is budgeting for at least a
similar improvement in headline earnings per share for the coming year.
Accounting policies and prior year adjustment
The results for the 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, except for the matters below:
During the year the Group changed its accounting policy with respect to the
consolidation of the Tiger Wheels Limited Group Employee Trust and The Tiger
Wheels Limited Employees Share Trust (2000) (`the Share Trusts`). In order to
conform with the requirements of the JSE Securities Exchange South Africa, the
Group now consolidates the Share Trusts. The major effects of this change was
to eliminate a dividend received from the Share Trusts and decrease the weighted
average shares in issue. Consolidating the previously unconsolidated Share
Trusts increases the current year attributable earnings per share by 0,6 cents
and headline earnings per share by 0,8 cents. The effect of this change in
accounting policy on the 2003 results is an increase of attributable earnings
per share by 2,8 cents and headline earnings per share by 3,1 cents.
An accounting error on the conversion from German Commercial Code (`HGB`) to
South African Statements of Generally Accepted Accounting Practice, which
occurred at the initial acquisition and consolidation of ATS has been corrected
in the at acquisition balances of the group. This resulted in an increase in net
assets of R11,9 million, a decrease in accumulated profits of R14,8 million, a
decrease in non-distributable reserves of R24 million and a corresponding
increase in minority interest of R50,7 million.
Comparative amounts have been restated where applicable to account for the
above.
Audit report
The consolidated results for the year have been audited by Fisher Hoffman PKF
(Jhb) Inc and their unqualified audit report is available for inspection at the
company`s registered office.
Declaration of dividend
Notice is hereby given that the board has declared an annual dividend of 71
cents per ordinary share for the year to 30 June 2004, payable to shareholders
recorded in the register of the company on Thursday, 23 September 2004.
Shareholders are advised that the last day to trade `CUM` the dividend will be
Thursday, 16 September 2004. The shares will trade `EX` the dividend as from
Friday, 17 September 2004 and the record date will be Thursday, 23 September
2004. Share certificates may not be dematerialised or rematerialised during the
period Friday, 17 September 2004, to Thursday, 23 September 2004, both days
inclusive. Payment will be made on Monday, 27 September 2004.
On behalf of the board
Eddie Keizan Martin Glatt
Joint chairman and CEO Joint chairman
Johannesburg
2 September 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 Investor Services 2004 (Pty) Limited,
Registration number, 2004/003647/07, 70 Marshall Street, Johannesburg 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: 02/09/2004 02:00:22 PM Produced by the JSE SENS Department
