| Tue 1 Mar 2005, 16:24 | | REVIEWED YEAR END RESULTS - DECEMBER 2004 |
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Maxiprest - Reviewed year end results - December 2004
BRIDGESTONE FIRESTONE MAXIPREST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/006456/06
Share code: BDS ISIN: ZAE000027447
(`Maxiprest`)
REVIEWED YEAR END RESULTS - DECEMBER 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 24 retread plants and 105 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
existed in Botswana, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe (which
was closed after year-end). 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, holds a strategic 70% 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 year ended December 2004, Group turnover declined by 10,6%
as compared to the prior year to R1,363 million (2003: R1,524 million).
Conditions in the domestic market continued to deteriorate with lower selling
prices impacting margins and product availability impacting the Group`s ability
to satisfy demand. Trading in sub-Saharan Africa continued to be negatively
impacted by product shortages following global supply shortages, particularly
with respect to imported product.
Headline earnings decreased to a loss of R44,5 million (2003: R2,1 million
profit) being impacted primarily by a reduction in margins and the impact of
charges approximating R30 million which is explained more fully hereunder.
At trading level, margins were reduced to 24,6% (2003: 26,9%) for the period
under review with the domestic margins coming under pressure. In particular,
new tyre margins were impacted negatively through currency appreciation
affecting market pricing coupled with increased product costs from
manufacturers. Trading in Africa was hampered by product shortages resulting in
insufficient throughput in the export countries which ultimately impacted the
bottom line.
The results for the year have been impacted by charges approximating R30
million, the major contributors being the impairment of investments in African
operations of R14,6 million, retrenchments in these territories amounting to
R3,4 million and the payment for loss of office in respect of previous directors
amounting to R7,4 million. The strengthening of the rand furthermore impacted
results negatively by R4,9 million (2003: R11,6 million).
The consolidated export operations (excluding South Africa, Botswana, Namibia
and Swaziland) incurred a loss of R36,8 million for the year after making the
necessary provisions above amounting to R18,0 million.
The position with regard to the various countries was as follows:
As in the prior year, the Zimbabwean operation has not been consolidated. The
Zimbabwean operation was closed on 21 January 2005 primarily due to the
continued political and economic instability in that country. The remittability
of funds from Zimbabwe was further hampered by the implementation of an auction
system for obtaining foreign exchange as regulated by the Zimbabwean Reserve
Bank in the second half of the year. Furthermore, the Zimbabwean operation
holds deposits of R5,2 million in CFX Bank. This bank was placed under
curatorship in December, which has further impeded the availability of currency.
The closure of the operation has resulted in retrenchment costs of R1,7 million
which was funded partially by the utilisation of an overdraft facility secured
by the Group. The full facility amounts to R3,0 million, of which
R1,4 million has been utilised and has been provided for in the Group. The Group
is currently in the process of realising the remaining assets of the Zimbabwean
operation in order to minimise any further losses. The investment in the
Zimbabwean operation has been written off at year end which impacted the results
for the year by R3,7 million (2003: R1,8 million).
The Zambian operations continued to incur losses particularly as a result of
insufficient product to meet demand resulting in an underrecovery in the
contribution against overheads. The Zambian operation has been rationalised
during the year. The Chingola factory was closed and the assets sold prior to
year end at a loss of R1,2 million to the Group. The Mozambique operation,
despite the product shortages, managed to break even. Provision for impairment
has been made in respect of the investments in these countries. Management will
continue to evaluate the investments going forward.
The Group`s associate empowerment company, Roadgrip Afrityre Holdings
(Proprietary) Limited (`RGA`) has traded at a reduced loss of R5,0 million for
the year. This was due to a significant increase in business contracts being
secured and an improvement in financial management. RGA recorded a profit for
the year amounting to R2,0 million (2003: R18,7 million loss) after the release
of provisions of R7,0 million relating mainly to the recovery of the NTI debt
which had been fully provided for, and which has been fully accounted for in the
Group results.
Net cash generated during the year amounted to R33,7 million (2003: R133,5
million utilisation). Capital investment accounted for R34,5 million (2003:
R47,9 million) mainly attributable to the investment in fixed assets.
Improvement in working capital management due to the reduction in inventory and
the extension of credit terms from the major shareholder and supplier
contributed favourably towards the Group`s year end cash position. The Group
continued to fund the recapitalisation of its motor vehicle fleet through short
term financing which impacted cash flow favourably by R11,5 million (2003: R 9,9
million). The Group`s year end cash position amounted to a net exposure of R44,9
million (2003: R78,7 million).
* 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 with the strong
rand contributing to intensified pressure on pricing. The Group continues to
refocus its product mix to minimise the impact on margins and is focusing on
core competencies to improve operating performance.
The Group has made considerable progress in reducing overhead structures through
its rationalisation initiatives and will continue to evaluate cost reduction
opportunities going forward. The Group, through the support of its major
shareholder, Bridgestone SA Holdings (Proprietary) Limited, believes that the
objectives of the Group will be realised and that a return to profitability
could be experienced in the 2005 financial year.
* CHANGES IN DIRECTORATE
The following changes in directorate took place since the date of the
publication of the annual report:
W Northing resigned as an executive director on 15 July 2004. T Wada resigned as
Chairman on 1 December 2004 . Y Ito was appointed Chairman on the same date.
R Barlow resigned as financial director with effect from 1 January 2005.
On 27 January 2005, Y Suzuki was appointed financial director and HJ Wessels was
appointed director responsible for OTR (Off the Road Tyres).
S Hashimoto resigned as non-executive director on 24 February 2005. S Egashira
was appointed as a non-executive director on the same date.
* REVIEW BY THE INDEPENDENT AUDITORS
The financial information has been reviewed, but not audited, by Deloitte &
Touche, whose unqualified review report is available for inspection at the
company`s registered office. The report draws attention to the Group`s departure
from AC127/AC115 as described under the heading Accounting Policies.
ON BEHALF OF THE BOARD - 02 March 2005
Y ITO H TAKENAKA
Chairman Chief Executive Officer
Non-Executive Director
INCOME STATEMENT
for the year ended 31 December 2004
Reviewed Audited
31 Dec 2004 31 Dec 2003
R `000 R `000
Revenue 1,363,321 1,524,678
Cost of sales (1,028,409) (1,115,222)
Gross profit 334,912 409,456
Other operating expenses (376,560) (374,226)
Operating (loss)/profit (41,648) 35,230
Net finance cost (14,052) (13,583)
Interest received 1,877 3,477
Interest paid (15,929) (17,060)
Share of profits/(losses) of associated 801 (7,397)
companies
(Loss)/profit before tax (54,899) 14,250
Income tax expense 2,554 (16,700)
Loss after tax (52,345) (2,450)
Attributable to outside shareholders 803 691
Loss for the year (51,542) (1,759)
Shares in issue (million) 158.2 158.2
Less: Treasury shares (4.2) (4.1)
154.0 154.1
Weighted shares in issue (million) 154.0 154,1
- basic and diluted
Loss per share (cents) Basic and diluted (33,5) (1,1)
Headline (loss)/earnings (R`000)
Loss for the year (51,542) (1,759)
Goodwill amortisation and impairment 7,140 4,588
Profit on sale of assets (201) (1,012)
Tax effect of adjusted items 60 304
(44,543) 2,121
Headline (loss)/earnings per share
(cents)
- basic and diluted (28,9) 1.4
Dividend per share (cents) 0.0 0.0
Depreciation (R`000) 20,772 16,067
Capital expenditure (R`000)
- incurred 34,552 47,987
- approved 39,777 32,030
BALANCE SHEET
at 31 December 2004
Reviewed Audited
31 Dec 2004 31 Dec 2003
R `000 R `000
ASSETS
Non-current assets
Property, plant and equipment 139,852 132,940
Goodwill 2,363 8,403
Investment in associates 12,236 12,239
Unconsolidated subsidiaries 0 3,731
Financial asset 0 1,151
Deferred taxation 13,858 2,424
168,309 160,888
Current assets
Inventory 141,806 165,018
Accounts receivable 239,465 222,472
Cash at bank 44,166 182,887
425,437 570,377
TOTAL ASSETS 593,746 731,265
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 123,008 123,008
Accumulated profits 67,244 118,786
Other reserves (1,522) (2,097)
188,730 239,697
Outside shareholders` interest (425) 378
Long term liabilities 11,493 8,437
Current liabilities
Accounts payable 292,633 207,096
Short term portion of long term 10,457 1,965
liabilities
Taxation payable 1,700 12,029
Bank overdraft 89,158 261,663
393,948 482,753
TOTAL EQUITY AND LIABILITIES 593,746 731,265
Net asset value per share (cents) 119,3 151,5
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2004
Reviewed Audited
31 Dec 2004 31 Dec 2003
R `000 R `000
Share capital and premium
Balance at end of year - shares in issue 129,866 129,866
Treasury shares (6,858) (6,858)
Balance at end of the year 123,008 123,008
- excl. treasury shares
Accumulated profits
Balance at beginning of year 118,786 120,545
Loss for the year (51,542) (1,759)
Balance at end of year 67,244 188,786
Shareholders for dividend
Balance at beginning of year 0 7,702
Paid during the year 0 (7,702)
Balance at end of year 0 0
Other reserves
Balance at beginning of year (2,097) (1,988)
Exchange difference arising on 575 (109)
translation of foreign operations
Balance at end of year (1,522) (2,097)
Capital and reserves 188,730 239,697
ABRIDGED CASH FLOW STATEMENT
for the year ended 31 December 2004
Reviewed Audited
31 Dec 2004 31 Dec 2003
R `000 R `000
Net cash flows from operating activities 48,720 (92,287)
Net cash flows from investing activities (26,484) (51,223)
Net cash flows from financing activities 11,548 9,917
Net cash generated/(utilised) 33,784 (133,593)
Cash and cash equivalents at beginning of (78,776) 54,817
year
Cash and cash equivalents end of the year (44,992) (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 year.
*Directors - Executive:
H Takenaka (Chief Executive Officer) (Japanese)
G P Nel
Y Suzuki (Japanese)
H J Wessels
* Non-Executive:
Y Ito (Chairman) (Japanese)
A J Aaron
S Egashira (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
Date: 01/03/2005 04:10:09 PM
Produced by the JSE SENS Department
