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TiWheel: Unaudited Group Results For The Six Months Ended 31 December 2004
Tiger Wheels Limited
(Incorporated in the Republic of South Africa)
Registration No. 1970/011662/06
Share Code: TIW / ISIN code ZAE000007407
Unaudited Group Results For The Six Months Ended 31 December 2004
Unaudited Restated
at Unaudited Audited
31 December at at
31 December 30 June
TIGER WHEELS LIMITED 2004 2003 2004
ABRIDGED BALANCE SHEET R`000 R`000 R`000
----------------------
ASSETS
Non-current assets 857,550 800,856 828,431
---------- --------- --------
Property, plant and equipment 838,144 787,292 801,973
Trademarks - 87 85
Goodwill 12,555 4,320 12,050
Other investments 2,417 37 43
Financial assets - 9,120 11,424
Deferred taxation 4,434 - 2,856
Current assets 1,124,456 1,089,680 1,130,143
---------- --------- --------
Inventories 464,933 445,227 404,781
Trade and other receivables 407,468 462,009 483,340
Taxation - - 888
Bank and cash balances 252,055 182,444 241,134
---------- --------- ---------
Total Assets 1,982,006 1,890,536 1,958,574
---------- --------- ---------
EQUITY AND LIABILITIES
Shareholders` equity 933,440 760,388 861,613
--------- --------- ---------
Capital and reserves 726,332 605,229 690,595
Minority interest 207,108 155,159 171,018
Non-current liabilities 323,030 302,174 325,873
--------- --------- ---------
Interest bearing liabilities 312,841 297,621 310,938
Financial liabilities 9,836 - 10,353
Deferred taxation 353 4,553 4,582
Current liabilities 725,536 827,974 770,988
--------- --------- ---------
Trade and other payables 555,984 611,458 561,515
Provisions 65,436 76,911 74,821
Interest bearing liabilities 64,230 81,269 97,820
Short term borrowings 25,151 32,307 19,421
Taxation 14,735 26,029 17,411
--------- --------- ---------
Total equity and liabilities 1,982,006 1,890,536 1,958,474
--------- --------- ---------
Net tangible asset value per
share (cents) 1,183 1,013 1,134
Unaudited Restated Audited
period Unaudited year
% Change ended period ended
31 December ended 30 June
31 December
2004 2003 2004
R`000 R`000 R`000
ABRIDGED INCOME STATEMENT
-------------------------
Revenue 0.3% 1,532,804 1,528,974 3,181,580
--------- --------- ---------
Operating income 13,2% 97,730 86,354 229,014
Interest received 6,394 16,012 23,953
Interest paid (14,394) (27,125) (31,998)
--------- --------- ---------
Profit before taxation 19.3% 89,730 75,241 220,969
Taxation (19,087) (23,654) (44,404)
--------- --------- ---------
Profit after taxation 70,643 51,587 176,565
Minority interest (26,359) (6,432) (35,788)
--------- --------- ---------
Earnings attributable to
ordinary shareholders (1.9%) 44,284 45,155 140,777
--------- --------- ---------
Reconciliation of headline
earnings per share (cents)
Attributable earnings per
share 73,7 76.1 236.9
Adjusted for :
- Goodwill amortised - 1.2 0.4
- Sale of investments 20.9 2.8 2.6
----- ----- -----
Headline earnings per share
(cents) 18.3% 94.7 80.1 239.9
----- ----- -----
Free cash flow per share
(cents) 171.7 167.4 199.1
Proposed dividend per share
(cents) - - 71.0
Diluted attributable earnings
per share (cents) 72.5 - 232.9
Diluted headline earnings per
share (cents) 93.1 - 235.9
Number of shares in issue
(`000)
- At end of period (net of
treasury shares) 60,348 59,329 59,842
- Weighted average 60,059 59,308 59,423
ABRIDGED STATEMENT OF CHANGES IN
EQUITY
-------------------------------- Restated Audited
Unaudited Unaudited year
period period ended
ended ended 30 June
31 December 31 December
2004 2003 2004
R`000 R`000 R`000
Equity at beginning of period
As previously stated 690,595 643,286 602,351
Accounting policy change / prior
year adjustment - (40,935) -
--------- --------- ---------
Restated equity at beginning of
period 690,595 602,351 602,351
Changes in
Share capital 5 - 8
Share premium 3,866 - 6,065
Non-distributable reserves 31,093 (11,955) (28,284)
--------- --------- ---------
Movement in foreign currency
translation reserve 7,290 (28,814) (32,837)
Hedging reserve 22,023 16,859 (1,951)
Other 1,780 - 6,504
Accumulated profit 773 14,833 110,455
--------- --------- ---------
Earnings attributable to ordinary
Shareholders 44,284 45,155 140,777
Dividend (43,511) (30,322) (30,322)
--------- --------- --------
Equity at end of period 726,332 605,229 690,595
--------- --------- ---------
ABRIDGED CASH FLOW STATEMENT
---------------------------- Unaudited Restated
period Unaudited Audited
ended period ended year ended
31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Operating cash flow 162,112 174,865 307,932
Investing cash flow (58,986) (75,599) (189,606)
Financing cash flow (110,134) 4,323 59,498
--------- --------- ---------
Movement in cash resources (7,008) 103,589 177,824
Cash resources at beginning of
year 221,713 46,548 46,548
Foreign entities translation
adjustment 12,199 - (2,659)
--------- --------- ---------
Cash resources at end of period 226,904 150,137 221,713
--------- --------- ---------
Comprising :
Bank and cash balances 252,055 182,444 241,134
Short-term borrowings (25,151) (32,307) (19,421)
--------- --------- ---------
226,904 150,137 221,713
--------- --------- ---------
SEGMENTAL ANALYSIS
------------------ 6 months December 2004
ATS Group Balance of group Total
Europe South North Europe South
Africa America Africa
Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 818 234 75 - - 1,127
Wholesale 25 - - 100 147 272
Retail - - - - 225 225
Group services
and inter-group
eliminations - - (15) - (76) (91)
----- ----- ----- ----- ----- -----
Total revenue 843 234 60 100 296 1,533
----- ----- ----- ----- ----- -----
Operating income
Manufacturing 77 8 (19) - - 66
Wholesale 1 - - (6) 14 9
Retail - - - - 27 27
Group services
and inter-group
eliminations * 55 - (1) - (58) (4)
----- ----- ----- ----- ----- -----
Total operating income
133 8 (20) (6) (17) 98
----- ----- ----- ----- ----- -----
Interest received 1 - - - 5 6
Interest paid (7) (3) (1) (1) (2) (14)
----- ----- ----- ----- ----- -----
Net financing costs (6) (3) (1) (1) 3 (8)
----- ----- ----- ----- ----- -----
Interest-bearing debt# 116 42 37 (3) (42) 150
Capital expenditure 39 3 7 - 11 60
Depreciation 29 15 7 1 4 56
Future capital commitments
approved 52 16 23 - 1 92
* Negative goodwill of R62m is included in Group services for ATS Europe and a
loss on the disposal of TSWM of R62m is included in Balance of Group South
Africa.
# Net of cash on hand
SEGMENTAL ANALYSIS
------------------ 6 months December 2003 1
ATS Group Balance of group Total
Europe North Europe South
America Africa
Rm Rm Rm Rm Rm
Revenue
Manufacturing 918 41 - 228 1,187
Wholesale 26 - 94 125 245
Retail - - - 207 207
Group services and
inter-group eliminations - (23) - (87) (110)
----- ----- ----- ----- -----
Total revenue 944 18 94 473 1,529
----- ----- ----- ----- -----
Operating income
Manufacturing 87 (24) - 3 66
Wholesale (2) - (4) 11 5
Retail - - - 22 22
Group services and
inter-group eliminations - (11) - 4 (7)
----- ----- ----- ----- -----
Total operating income 85 (35) (4) 40 86
----- ----- ----- ----- -----
Interest received 12 - - 4 16
Interest paid (11) (2) - (14) (27)
----- ----- ----- ----- -----
Net financing costs 1 (2) - (10) (11)
----- ----- ----- ----- -----
Interest-bearing debt# 167 17 11 34 229
Capital expenditure 50 27 - 5 82
Depreciation 30 1 1 16 48
Future capital commitments
approved 72 4 - 13 89
(1) Restated
# Net of cash on hand
SEGMENTAL ANALYSIS
------------------ Year ended 30 June 2004
ATS Group Balance of group Total
Europe North Europe South
America Africa
Rm Rm Rm Rm Rm
Revenue
Manufacturing 1,904 97 - 437 2,438
Wholesale 62 - 208 236 506
Retail - - - 397 397
Group services and
inter-group eliminations - (23) - (136) (159)
----- ----- ----- ----- -----
Total revenue 1,966 74 208 934 3,182
----- ----- ----- ----- -----
Operating income
Manufacturing 218 (40) - 18 196
Wholesale 4 - (8) 26 22
Retail - - - 38 38
Group services and
inter-group eliminations (23) 5 - (9) (27)
----- ----- ----- ----- -----
Total operating income 199 (35) (8) 73 229
----- ----- ----- ----- -----
Interest received 1 - 1 22 24
Interest paid (11) (1) (2) (18) (32)
----- ----- ----- ----- -----
Net financing costs (10) (1) (1) 4 (8)
----- ----- ----- ----- -----
Interest-bearing debt# 142 23 13 9 187
Capital expenditure 114 28 1 37 180
Depreciation 54 9 1 36 100
Future capital commitments
approved 106 26 - 38 170
# Net of cash on hand
NOTES
-----
The consolidated summarised interim financial statements are prepared in
accordance with South African Statements of Generally Accepted Accounting
Practice and the Companies Act in South Africa, and are consistent with those
applied in the year ended 30 June 2004 except as described below.
The Group has changed its accounting policies in order to comply with AC 501
and AC 140.
AC 501 : Accounting for Secondary Tax on Companies (`STC`). This change in
accounting policy did not have a material effect on the current reporting
periods results and no impact on the reported 2003 results.
AC 140 : The adoption of the new practice with regard to business combinations
has resulted in goodwill amortisation amounting to R0.75 million in the
current year not being charged against income. There is no requirement to
restate the comparative results.
Comparative information for the six months ended 31 December 2003 has been
adjusted to reflect the effect of accounting restatements made during the year
ended 30 June 2004 in respect of:
i) the consolidation of the Tiger Wheels Limited Group Employee Trust and
The Tiger Wheels Limited Employee Share Trust (2000) (`the Trusts`). The
major effects of the changes were to eliminate dividends received from
the Trusts and decrease the weighted average shares in issue.
ii) an accounting error, 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 in non-
distributable reserves of R24 million and a corresponding increase in
minority interest of R50,7 million.
FOREIGN EXCHANGE RATES
---------------------- Unaudited
six months Unaudited Audited
ended six months year
31 December ended ended
31 December 30 June
2004 2003 2004
Euro / Rand
End of period rate (balance sheet) 7.68 8.05 7.38
Average rate (income statement) 7.79 7.93 7.92
Euro / Pound
End of period rate (balance sheet) 1.41 1.42 1.49
Average rate (income statement) 1.45 1.44 1.46
Dollar / Euro
End of period rate (balance sheet) 1.36 1.25 1.21
Average rate (income statement) 1.27 1.16 1.19
Zloty / Euro
End of period rate (balance sheet) 4.09 4.72 4.52
Average rate (income statement) 4.31 4.59 4.65
Rand / Dollar
End of period rate (balance sheet) 5.63 6.43 6.09
Average rate (income statement) 6.15 6.81 6.64
Rand / Pound
End of period rate (balance sheet) 10.86 11.41 10.98
Average rate (income statement) 11.33 11.36 11.56
COMMENTS
Nature of business and comments
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 41 Tiger Wheel & Tyre retail stores in Southern Africa, - 29 owned
and 12 franchised - cover all major centres and hold a significant share of
the replacement passenger tyre and wheel aftermarket business in the region.
The agreement to integrate the South African wheel manufacturing business
located in Babelegi into the group`s 74% owned international wheel
manufacturing company, ATS Beteiligungs GmbH (`ATS`), which is headquartered
in Germany, was finalised - as announced in the press on 6 December 2004. This
transaction has now been approved by the South African Reserve Bank and the
South African Competition Commission and only awaits certain requirements,
including new banking facilities in Germany. The long-term positive impact of
this re-structuring has been referred to in many previous announcements.
However, it has resulted in a once-off negative impact of R12m on the group`s
attributable earnings - as reflected in the headline earnings adjustment.
Currency volatility continues to have a major impact on the various businesses
in the group, both positively and negatively.
Results
In spite of no growth in group revenues for the half year under review,
operating income has increased by 13%, profit before tax by 19% and headline
earnings per share by 18%. This has been achieved in the face of the continued
strength of the Rand and the extremely competitive environment within the
global automotive industry.
The ATS plants in Germany and Poland made a positive contribution to these
results, while the South African plant did well to show a small profit in such
a strong Rand environment. The US plant, however, continues to incur greater-
than-budgeted start-up losses while waiting for its OEM customers` new models
to commence (delayed) forecast production in reasonable volumes, a situation
which is likely to normalise in the next financial year. A possible
unquantified transfer pricing tax query from the tax authorities in Germany -
relating to prior periods, and presently not regarded as material - will be
vigorously defended if formally raised.
A pleasing aspect of the half-year has once again been the excellent results
achieved by the South African retail business, Tiger Wheel and Tyre. Tiwheel`s
South African wholesale business, Yokohama Southern Africa, has performed
moderately well in an extremely competitive environment of cheap tyre imports
from China and elsewhere.
The group generated cash of R162m at operating level and R103m after capex
during the period.
Prospects
The South African trading businesses are expecting the buoyant local market to
continue. However, due to a combination of price pressure from customers,
short term gaps in the order book, and the expected poor performance of the
new US plant in the second half- year (in the group`s manufacturing
businesses), the overall results for the full year are likely to be similar to
those achieved last year. Planned capex for productivity improvements, new
orders currently in product development, and a rapid expansion of the US order
book are likely to make this a short term scenario only. The focus on becoming
a global cost leader bodes well for growth in output, efficiency and earnings
over the next few years.
Directorate
After the purchase by the Bidvest Group of a 17% interest in our company (with
a call option to purchase a further 3% by April 2005), we are pleased to
welcome Mr Brian Joffe, as well as his alternate, Mr Brand Pretorius, to our
board.
Declaration of dividend
It is company policy to declare an annual dividend at the year-end.
On behalf of the board
Eddie Keizan
Executive chairman
Johannesburg
7 March 2005
Directors: Eddie Keizan (Executive chairman), Phillip Vallet (Deputy
chairman)*, Martin Glatt*, Rainer Hagemann** (German), Josh Loots, Mike
Groves**, Brian Joffe*, Keith Rivers, Siegfried Teichert (German), Sybrand
Pretorius***
* Non-executive
** Independent non-executive
*** Alternate director to Brian Joffe
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: 07/03/2005 02:00:27 PM
Produced by the JSE SENS Department
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