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Bridgestone Firestone Maxiprest Limited - Interim Results June 2004
Release Date: 27/09/2004 17:15:02 Code(s): BDS
Bridgestone Firestone Maxiprest Limited - Interim Results June 2004
BRIDGESTONE FIRESTONE MAXIPREST LIMITED
(Registration Number: 1988/006456/06)
Share Code BDS ISIN: ZAE000027447
INTERIM RESULTS JUNE 2004
- THE COMPANY
Bridgestone Firestone Maxiprest Limited, listed on the JSE Securities Exchange
under the Cyclical Consumer Goods - Automobiles and Parts` Sector, is sub-
Saharan Africa`s predominant retreader, multi-brand new tyre distributor and
tyre management service provider. Its activities in the region are conducted
through 25 retread plants and 115 retail outlets, also providing support for its
24-hour transporter tyre breakdown service.
In SA, operations are conducted through wholly - and majority - owned
subsidiaries; Maxiprest Tyres (passenger, truck, bus and agriculture), Quality
Tyres (mining and earthmover), and Maxiprest Africa Operations (regional
development and distribution). In the balance of sub-Saharan Africa, operations
exist in Botswana, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe. All
operating entities in these areas are also classified as approved Bridgestone
Firestone agents.
Bridgestone Corporation (Japan), the world`s leading new tyre and rubber
manufacturer, now holds a strategic 70% (2003 - 66%) stake in the Group through
its local subsidiary Bridgestone SA Holdings (Pty) Ltd. Management, institutions
and the investing public hold the balance of the equity.
- OPERATIONAL PERFORMANCE
In summary, for the six months ended June 2004, Group turnover declined by 9,7%
as compared to the prior year comparative period to R719 million (2003: R796
million). Conditions in the domestic market continued to follow the pattern
established in the latter half of 2003 with lower selling prices impacting
margins. Trading in sub-Saharan Africa has been hampered by product shortages.
Turnover was further impacted negatively by R30,0 million with regard to exports
to Zimbabwe (non-consolidated subsidiary) where the distribution to Africa,
previously channelled via Maxiprest Africa Operations, is now handled directly
from manufacturers.
Headline earnings decreased to a loss of R3,7 million. (2003: R25,1 million)
being impacted primarily by the reduction in turnover.
At trading level, margins were reduced to 26,3% (2003: 27,8%) for the period
under review with the domestic margins coming under pressure, particularly with
respect to new tyre margins. Margins are still considered satisfactory given the
pressure on pricing which has continued into the first half of 2004 with margins
improving in comparison to the second half of 2003.
The results for the period have been impacted by charges approximating R14,9
million relating to, inter alia, the strengthening of the rand amounting to
R1,3 million, the write-down of investments in African operations of R1,9
million and the payment for loss of office in respect of the previous directors
amounting to R6,2 million. A provision of R5,5 million has been made in respect
of the full exposure of the Group to the related party relationship with Mabor
de Mocambique S.A.R.L as disclosed in note 30 in the annual financial
statements for the year ended 31 December 2003.
As in the prior period, the Zimbabwe operation has not been consolidated.
Although trading is still profitable in Zimbabwe, management considers it
prudent to continue to write down the investment taking into account the
continued political and economic instability in that country. The write-down in
the investment for the period amounted to R1,9 million (2003: Rnil) resulting in
the fair value of the investment being reflected at
R1,8 million at the end of June (December 2003: R3,7 million).
Management will continue to evaluate the investments and operating activities
during the balance of the financial year in order to determine whether any
further write-downs or provisions are necessary.
Headline earnings for the period have been further impacted by an increased tax
charge at an effective rate of 396,5% (2003: 39,2%).
The increased charge is due to the impact of non-deductible charges amounting to
R13,8 million which includes estimated tax losses in certain subsidiaries where
it is not deemed prudent to carry a deferred tax asset.
Net cash utilised during the period amounted to R18,5 million (2003: R140,0
million). Capital investment accounted for R 21,1 million (2003: R17,4 million)
being mainly attributable to the investment in fixed assets. Long term
liabilities increased by R9,4 million (2003: R0,7 million) for the period as the
Group continued to recapitalise its motor vehicle fleet.
- DIVIDEND
The Board has elected not to pay a dividend due to the current high level of
borrowings and the unsatisfactory operating performance for the period under
review. The Group`s dividend policy will be reviewed against future cash flow
performance.
- COMMENTARY AND OUTLOOK
The Group continues to face strong competition in the market. The Group has
refocused its product mix to improve margins and is focusing on core
competencies to improve operating performance. In addition, considerable
progress has been made in reducing overhead structures.
The Group`s associate empowerment company, Roadgrip Afrityre Holdings
(Proprietary) Limited (`RGA`) has shown an improvement on last year`s
performance through increased business contracts being secured and an
improvement in the financial management of the company. RGA has achieved a
breakeven position for the period under review (2003:
R1,6 million loss).
- CHANGES IN DIRECTORATE
Mr W Northing resigned as an executive director on 15 July 2004.
ON BEHALF OF THE BOARD - 22 September 2004
H TAKENAKA R J BARLOW
Chief Executive Officer Group Financial Director
INCOME STATEMENT
for the six months ended 30 June 2004
Unaudited Unaudited* Audited
6 months 6 months 12 months
30 June 2004 30 June 2003 31 Dec 2003
R `000 R `000 R`000
Revenue 719,779 796,672 1,524,678
Cost of sales (530,746) (575,243) (1,115,222)
Gross Profit 189,033 221,429 409,456
Other operating expenses (183,100) (175,344) (374,226)
Operating profit 5,933 46,085 35,230
Net finance cost (6,309) (4,690) (13,583)
Interest received 884 1,692 3,477
Interest paid (7,193) (6,382) (17,060)
Share of losses of
associated companies - (655) (7,397)
(Loss)/profit before tax (376) 40,740 14,250
Income tax expense (4,457) (15,951) (16,700)
(Loss)/profit after tax (4,833) 24,789 (2,450)
Attributable to outside shareholders 55 (750) 691
(Loss)/profit for the period (4,778) 24,039 (1,759)
Shares in issue (million) 158.2 158.2 158.2
Less: Treasury shares (4.2) (4.2) (4.1)
154.0 154.0 154.1
Weighted shares in issue (million)
- basic and fully diluted 154.0 154.0 154.1
Earnings per share (cents)
Basic and fully diluted (3.1) 15.6 (1.1)
Headline earnings (R`000)
Profit for the period (4,778) 24,039 (1,759)
Goodwill amortisation 1,775 1,103 4,588
Profit on sale of assets (1,046) - (1,012 )
Tax effect of adjusted items 314 - 304
(3,735) 25,142 2,121
Headline earnings
per share (cents)
Basic and fully diluted (2.4) 16.3 1.4
Dividend per share (cents) 0.0 0.0 0.0
Depreciation (R`000) 9,470 7,554 16,067
Capital expenditure (R`000)
- incurred 21,185 17,486 47,987
- approved for the year 32,030 22,573 32,030
BALANCE SHEET
at 30 June 2004
Unaudited Unaudited* Audited
30 June 2004 30 June 2003 31 Dec 2003
R `000 R `000 R`000
ASSETS
Non-current assets
Property, plant and equipment 143,025 122,958 132,940
Goodwill 6,628 8,623 8,403
Investment in associates 8,865 14,968 12,239
Unconsolidated subsidiaries 1,830 5,536 3,731
Financial asset - - 1,151
Deferred tax 3,340 2,621 2,424
163,688 154,706 160,888
Current assets
Inventory 174,107 178,024 165,018
Accounts receivable 227,924 275,986 222,472
Cash at bank 59,772 - 182,887
Income tax overpaid 1,928 - -
463,731 454,010 570,377
TOTAL ASSETS 627,419 608,716 731,265
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 123,008 122,943 123,008
Accumulated profits 114,008 144,584 118,786
Other reserves (1,880) (4,934) (2,097)
235,136 262,593 239,697
Outside shareholders` interest 323 1,905 378
Long term liabilities 13,535 793 8,437
Current liabilities
Accounts payable 214,995 244,639 207,096
Short term portion
of long term liabilities 6,345 471 1,965
Taxation payable - 13,068 12,029
Bank overdraft 157,085 85,247 261,663
378,425 343,425 482,753
TOTAL EQUITY AND LIABILITIES 627,419 608,716 731,265
Net asset value per share (cents) 148.6 166.0 151.5
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2004
Unaudited Unaudited* Audited
30 June 2004 30 June 2003 31 Dec 2003
R `000 R `000 R`000
Share capital and premium
Balance at beginning of the period,
excluding treasury shares 129,866 129,884 129,884
- consolidation of
share incentive trust - (18) (18)
Balance at end of the period,
excluding treasury shares 129,866 129,866 129,866
Treasury shares (6,858) (6,923) (6,858)
Balance at end of the period,
including treasury shares 123,008 122,943 123,008
Accumulated profits
Balance at beginning of the period,
Restated 118,786 120,545 120,545
- Adjusted balance at beginning
of the period 118,786 121,345 121,345
- Adjustment on adoption of AC133 - (800) (800)
Profit for the period (4,778) 24,039 (1,759)
Balance at end of the period 114,008 144,584 118,786
Shareholders for dividend
Balance at beginning of the period,
Restated - 7,702 7,702
Paid during the period, restated - (7,702) (7,702)
Balance at end of the period - - -
Other reserves
Balance at beginning of the period (2,097) (1,988) (1,988)
Exchange difference arising on
Translation of foreign operations 217 (6,095) (109)
Arising on consolidation of previously
unconsolidated subsidiaries - 3,149 -
Balance at end of the period (1,880) (4,934) (2,097)
Capital and reserves 235,136 262,593 239,697
ABRIDGED CASH FLOW STATEMENT
for the six months ended 30 June 2004
Unaudited Unaudited* Audited
30 June 2004 30 June 2003 31 Dec 2003
R `000 R `000 R`000
Net cash flows from
operating activities (8,848) (123,056) (92,287)
Net cash flows from
investing activities (19,167) (17,740) (51,223)
Net cash flows from
financing activities 9,478 732 9,917
Net cash utilized (18,537) (140,064) (133,593)
Cash and cash equivalents
at beginning of the period (78,776) 54,817 54,817
Cash and cash equivalents
at end of the period (97,313) (85,247) (78,776)
Accounting policies: The financial statements have been prepared in accordance
with the South African Statement of Generally Accepted Accounting Practice
applicable to interim financial reporting, with the exception of a segmental
analysis which will be provided in the annual financial statements. The
principal accounting policies applied in the preparation of these financial
statements are consistent with those applied in the prior period.
* The comparatives for the 6 months ended 30 June 2003 have been restated to
reflect the consolidation of the share incentive trust.
Directors - Executive:
H Takenaka (Chief Executive Officer) (Japanese) R J Barlow G P Nel Y Suzuki
(Japanese)
Non-Executive:
T Wada (Chairman)(Japanese) A J Aaron S Hashimoto (Japanese) S Wustmann
Independent Non-Executive:
R S Berkowitz A G Fletcher
Company Secretary:
G M Sinclair
Registered Office:
17 Chadwick Avenue
Wynberg
2090
(PO Box 543
Bergvlei
2012)
Auditors:
Deloitte & Touche
Private Bag X6
Gallo Manor
2052
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg
2001
Sponsor
Brait Sponsors (Pty) Limited
