| Fri 25 Nov 2005, 17:15 | | Wesco - Interim report for the six months ended 30 |
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Wesco - Interim report for the six months ended 30 September 2005
WESCO INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1968/005871/06
JSE code WES
ISIN ZAE000007928
Interim report for the six months ended 30 September 2005
CONDENSED GROUP INCOME STATEMENT
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
30 Sept. Change 30 Sept. 31 Mar
R000 2005 % 2004 2005
Revenue
Investment income 28 958 9.5 26 441 64 365
Other operating income 825
Administrative expenses (2 171) (29.2) (1 680) (3 889)
Operating income 26 787 8.2 24 761 61 301
Share of associates" 138 610 73.0 80 118 167 066
retained income
Income before taxation 165 397 57.7 104 879 228 367
Taxation (1 521) 40.4 (2 550) (4 769)
Profit from ordinary 163 876 60.1 102 329 223 598
activities
Minority interest (823) (8.4) (759) (1 579)
Net income attributable to 163 053 60.5 101 570 222 019
Wesco shareholders
Per share analysis - cents
Basic earnings 1 931 60.5 1 203 2 630
Attributable share of (64)
adjustment to basic earnings
by an associate
Headline earnings 1 867 55.2 1 203 2 630
Dividends 600 50.0 400 400
CONDENSED GROUP CASH FLOW STATEMENT
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
30 Sept. 30 Sept. 31 Mar.
R000 2005 2004 2005
Net cash inflow in operating 3 560 15 072 17 629
activities
Net cash used in investing (48 029) (100 000) (106 482)
activities
Decrease in cash and cash (44 469) (84 928) (88 853)
equivalents
Cash and cash equivalents at end 52 958 101 352 97 427
of the period
CONDENSED GROUP BALANCE SHEET
Restated Restated
Unaudited Unaudited Unaudited
30 Sept. 30 Sept. 31 Mar.
R000 2005 2004 2005
Assets
Non-current assets 1 420 791 1 197 184 1 284 165
Investment in associates 1 417 084 1 193 374 1 280 404
Property and equipment 3 707 3 810 3 761
Current assets 353 913 305 689 352 010
Total assets 1 774 704 1 502 873 1 636 175
Equity and liabilities
Capital and reserves 1 757 585 1 490 96 1 623 621
Minority interest 8 445 7 349 8 171
Deferred taxation 7 602 1 903 3 752
Current liabilities 1 072 2 661 631
Total equity and liabilities 1 774 704 1 502 873 1 636 175
Net asset value per share - cents 20 820 17 662 19 233
Number of ordinary shares in issue 8 441.8 8 441.8 8 441.8
(000)
STATEMENT OF CHANGES IN EQUITY
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
30 Sept. 30 Sept. 31 Mar.
R000 2005 2004 2005
Share capital
Balance at beginning and end of 11 752 11 752 11 752
the period
Non-distributable reserves 1 252 684 993 352 1 092 512
Balance at beginning of the period 1 092 512 904 341 904 341
Net fair value adjustments to 23 441 9 466 21 592
available for sale investments
Dilution of interest in associate (1 934) (1 964) (1 964)
Movement in associates" reserves 55 1 391 1 477
Transfer from retained earnings 138 610 80 118 167 066
Retained earnings 493 149 485 856 519 357
Balance at beginning of the period 519 357 498 171 498 171
Net income 163 053 101 570 222 019
Dividends paid (50 651) (33 767) (33 767)
Transfer to non-distributable (138 610) (80 118) (167 066)
reserves
Total capital and reserves 1 757 585 1 490 960 1 623 621
NOTES TO THE INTERIM REPORT
1. Accounting policies
These interim consolidated financial statements have been prepared in accordance
with IAS34, Interim Financial Reporting, under the historical cost convention as
modified by the revaluation of available for sale investments.
The group adopted International Financial Reporting Standards (IFRS) with effect
from 1 April 2004. Comparative amounts have been restated accordingly.
Comparative amounts in respect of the financial year ended 31 March 2005 are
reflected as "unaudited" as IFRS adjustments have not been audited by the
company"s external auditors.
Adjustments made as a result of the adoption of IFRS are based on best estimates
at the time of preparation hereof, and may further differ from IFRS actually in
effect at 31 March 2006 as a result of ongoing review and possible amendments by
interpretive guidance from the IASB and IFRIC.
IFRS adjustments of significance are the restatement of the carrying value of
investments in associates (largely due to associates" accounting treatment of
property, plant and equipment in application of IFRS), and accounting for fair
value adjustments to available for sale investments directly in equity instead
of in profit and loss.
Effect of the adoption of IFRS on the group"s balance sheet:
31 Mar. 30 Sept. 1 Apr.
R000 2005 2004 2004
Equity as previously reported 1 601 963 1 471 417 1 395 928
Adjustments on adoption of IFRS:
Non-distributable reserves 43 295 42 781 19 648
Retained earnings (21 637) (23 238) (1 312)
Equity as reported under IFRS 1 623 621 1 490 960 1 414 264
Adjustments to assets and
liabilities:
Investment in associates 21 936 19 798 18 569
Minority interest (278) (255) (233)
21 658 19 543 18 336
Effect of the adoption of IFRS on the group"s net income:
12 Months 6 Months
ended ended
31 Mar. 30 Sept.
R000 2005 2004
Net income as previously reported 240 501 109 902
Net fair value adjustments to available for (21 592) (9 466)
sale investments now recognised directly in
equity
Adjustments to share of associates" retained 3 110 1 134
income as a result of the underlying entities"
adoption of IFRS
Net income as restated 222 019 101 570
2. Commitments
Wesco and Toyota Motor Corporation, the shareholders of Toyota South Africa
(Proprietary) Limited, have mutually agreed to waive the previously contracted
commitment to purchase additional equity share capital in that company.
COMMENT
Results
Wesco adopted IFRS with effect from 1 April 2004 as described in the notes
above. Comparisons to the previous corresponding period in these comments are
therefore based on restated amounts.
NAAMSA-reported vehicle sales for the calendar year to September increased by
26.9% compared to the same period last year. Both passenger and light commercial
vehicle sales reflected this trend. Medium and heavy commercial sales grew by
more than 40%.
Toyota South Africa (Pty) LtdMarket leader Toyota, with increased capacity from
recent expansion of its facilities, was well geared to benefit from these
buoyant conditions. Particularly pleasing has been the successful launch of the
new generation Hilux, a significant model in Toyota"s line-up.
Substantially increased sales, together with the rewarding result of extensive
cost reduction programmes, led to an exceptional 90% increase in earnings for
this period. Wesco"s attributable share of earnings amounts to R125.3 million.
Metair Investments Ltd
The group"s share of Metair"s earnings for the period amounts to R33.4 million,
and is accounted for in the form of dividends received of R20.1 million and the
balance as share of retained income. The associate"s earnings (including profit
on the partial sale of an investment) increased by 8.5% on the previous
comparative period, but headline earnings decreased by 10%. Gross margins
reduced as a result of new business obtained at lower margins, as well as
disruption of manufacturing performance and additional costs incurred following
the introduction of technically more complex products and facilities. Metair"s
results for the 6 months ended 30 June 2005 were published and fully reported on
earlier.
Other investments
Other income included in revenue comprises interest and dividends from cash
balances and available for sale investments (portfolios of marketable
securities). Unrealised gains on revaluation of the latter, previously included
in revenue, are now in terms of IFRS credited directly to reserves and are
disclosed in the statement of changes in equity.
Prospects
Growth in local vehicle sales appears to be slowing down, and the Rand shows
signs of weakening.
Toyota is continuing with modernisation and further increasing of capacity at
its Durban plant, and is expected to change on its balance sheet to a net
borrowing position in the near future. It is not anticipated that there will be
a similar improvement from this associate in the second half of the financial
year due to increased interest and depreciation charges combined with the effect
of the abovementioned economic factors.
Metair is reasonably positive about its short-term outlook, and expects its
results for the second half of the year to be similar to those of the period
under review.
In summary, Wesco"s earnings for the full year are expected to show an
improvement on the previous year, but to a lesser extent than reflected in the
results for the first six months.
Dividend
It is Wesco"s policy to declare a dividend annually in respect of a full year"s
earnings.
However, having been relieved of the commitment referred to above, the company
has decided to distribute approximately R150 million in surplus funds to
shareholders, and a special dividend of 1800 cents per ordinary share has
therefore been declared in terms of the dividend announcement set out below.
On behalf of the board
E Le R BRADLEY G J STRYDOM
Non-executive Chairman Chief Executive Officer
Johannesburg 25 November 2005
DIVIDEND ANNOUNCEMENT
Notice is hereby given that a special dividend, dividend number 37, of 1800
cents per ordinary share has been declared from retained earnings. In compliance
with STRATE, the salient dates for the payment of the dividend are as follows:
Last day to trade cum-dividend Friday, 13 January 2006
Shares commence trading ex-dividend Monday, 16 January 2006
Record date Friday, 20 January 2006
Payment date Monday, 23 January 2006
Share certificates may not be dematerialised/rematerialised between Monday 16
January 2006 and Friday 20 January 2006, both days inclusive.
On Monday 23 January 2006, the dividend will be electronically transferred to
the bank accounts of certificated shareholders who utilise this facility. In
respect of those who do not, cheques dated 23 January 2006 will be posted on or
about that date. The accounts of shareholders who have dematerialised their
shares (which are held at their central securities depository participant or
broker) will be credited on Monday 23 January 2006.
On behalf of the board
FDW PEACHEY
Company Secretary
Johannesburg 25 November 2005
WESCO INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1968/005871/06
JSE code WES
ISIN ZAE000007928
Directorate
Executive director
GJ Strydom (Chief Executive Officer)
Independent non-executive director
RS Broadley
Non-executive (non-independent) directors
E Le R Bradley (Chairman), AD Plummer (British), PR Robinson
Company Secretary
FDW Peachey
Registered office
Wesco House, 10 Anerley Road, Parktown, Johannesburg
Telephone 011 646 3011
Facsimile 011 646 3022
Postal address
PO Box 2077, Saxonwold 2132
Registrar
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg
(PO Box 61051, Marshalltown 2107)
Sponsor
LPC Manhattan Moela (Pty) Ltd
4th Floor, South Office Tower, Hyde Park Shopping Centre, Hyde Park,
Johannesburg
(P O Box 41966, Craighall 2024)
Auditors
PricewaterhouseCoopers Inc.,
2 Eglin Road, Sunninghill, Johannesburg
(Private Bag X36, Sunninghill 2157)-
Date: 25/11/2005 05:15:27 PM Produced by the JSE SENS Department
