| Wed 8 Mar 2006, 15:00 | | Tiwheel - Unaudited Interim Group Results: six mon |
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TIW
TIW
Tiwheel - Unaudited Interim Group Results: six months ended 31 December 2005
Tiger Wheels Limited
(Incorporated in the Republic of South Africa)
(Reg No. 1970/011662/06)
Share code: TIW & ISIN: ZAE000007407
("Tiwheel" or "the group" or "the company")
www.tiwheel.co.za
Unaudited Interim Group Results for the six months ended 31 December 2005
- Revenue up 7,5%
- Headline earnings per share down 33,9%
ABRIDGED INCOME STATEMENT
Unaudited Unaudited
period ended year ended
31 December 30 June
Change 2005 2004* 2005*
% R"000 R"000 R"000
Revenue 7,5 1 647 363 1 532 804 3 102 644
Operating income (62,5) 37 469 99 885 216 277
Interest received 13 435 6 394 14 998
Interest paid (20 855) (14 394) (35 747)
Profit before taxation (67,3) 30 049 91 885 195 528
Taxation 5 572 (17 050) (38 358)
Profit for the period 35 621 74 835 157 170
Attributable to:
Equity holders of the
parent 33 575 40 321 111 115
Minority shareholder 2 046 34 514 46 055
Profit for the period 35 621 74 835 157 170
Reconciliation of
headline earnings
per share (cents)
Attributable earnings
per share 56,1 67,1 185,0
Adjusted for:
- Impairment of
investments/loans 9,9 - 0,9
- Sale of investments - 32,7 41,3
- Impairment of fixed
assets - - 1,4
Headline earnings per
share (cents) (33,9) 66,0 99,8 228,6
Number of shares in
issue ("000)
- At end of period
(net of treasury
shares) 59 668 60 348 60 440
- Weighted average 59 799 60 059 60 076
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited
period ended year ended
31 December 30 June
2005 2004* 2005*
R"000 R"000 R"000
Operating cash flow 114 453 162 112 321 672
Investing cash flow (258 161) (58 986) (177 669)
Financing cash flow 158 333 (110 134) (132 450)
Movement in cash resources 14 625 (7 008) 11 553
Cash resources at beginning
of year 232 808 221 713 221 713
Foreign entities translation
adjustment 7 585 12 199 (458)
Cash resources at end of period 255 018 226 904 232 808
Comprising:
Bank and cash balances 312 743 252 055 255 063
Short-term borrowings (57 725) (25 151) (22 255)
Net cash resources at end of
period 255 018 226 904 232 808
Free cash flow per share (cents) (240,3) 171,7 239,7
FOREIGN EXCHANGE RATES
Closing rate Average rate
31 December 30 June 31 December 30 June
2005 2004 2005 2005 2004 2005
Rand/Euro 7,49 7,68 8,03 7,80 7,79 7,88
Euro/Pound 1,46 1,41 1,49 1,46 1,45 1,46
Dollar/Euro 1,18 1,36 1,21 1,20 1,27 1,27
Zloty/Euro 3,87 4,09 4,05 3,97 4,31 4,21
Rand/Dollar 6,33 5,63 6,66 6,51 6,15 6,20
Rand/Pound 10,90 10,86 11,94 11,42 11,33 11,50
ABRIDGED BALANCE SHEET
Unaudited at Unaudited
31 December 30 June
2005 2004* 2005*
R"000 R"000 R"000
ASSETS
Property, plant and equipment 1 248 827 971 203 1 096 203
Intangible assets 4 220 6 328 3 981
Goodwill 10 361 11 374 11 103
Other investments 47 2 418 51
Financial assets 70 404 - 8 053
Investment tax credit 64 367 - 70 050
Deferred taxation 9 627 7 430 13 068
Non-current assets 1 407 853 998 753 1 202 509
Inventories 462 342 464 933 455 155
Trade and other receivables 372 143 409 015 421 862
Financial assets held for trade 60 970 - 53 526
Taxation 9 771 - 67
Bank and cash balances 251 772 252 055 201 537
Current assets 1 156 998 1 126 003 1 132 147
Total assets 2 564 851 2 124 756 2 334 656
EQUITY AND LIABILITIES
Capital and reserves 926 959 825 630 926 300
Minority interest 233 474 211 055 226 766
Total equity 1 160 433 1 036 685 1 153 066
Interest-bearing liabilities 236 114 324 889 207 236
Financial liabilities 3 008 9 836 5 382
Deferred income 64 367 - 70 050
Deferred taxation 11 458 25 694 24 908
Non-current liabilities 314 947 360 419 307 576
Trade and other payables 624 087 555 986 577 072
Provisions 61 732 65 436 95 907
Interest-bearing liabilities 331 660 66 344 150 208
Short-term borrowings 57 725 25 151 22 255
Taxation 14 267 14 735 28 572
Current liabilities 1 089 471 727 652 874 014
Total liabilities 1 404 418 1 088 071 1 181 590
Total equity and liabilities 2 564 851 2 124 756 2 334 656
Net tangible asset value per
share (cents) 1 923 1 707 1 901
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
period ended year ended
31 December 30 June
2005 2004* 2005*
R"000 R"000 R"000
Equity at beginning of period as
previously stated 1 153 066 852 573 852 573
Adjusted for:
IFRS adoption - 96 915 96 915
Restated equity at beginning
of year 1 153 066 949 488 949 488
Movement in:
Share capital (2) 5 6
Share premium (48 767) 3 866 4 801
Shares (repurchased)/issued (3 580) 3 866 4 801
Capital distribution (45 187) - -
Share-based compensation reserve 4 303 - 829
Non-distributable reserves 11 550 40 490 59 794
Movement in foreign currency
translation reserve (4 316) 16 687 46 525
Hedging reserve 15 866 22 023 21 702
Transfer to accumulated profit - - (7 908)
Other - 1 780 (525)
Accumulated profit 33 575 (3 190) 76 411
Earnings attributable to ordinary
shareholders 33 575 40 321 111 115
Transfer from non-distributable
reserves - - 7 908
Dividend paid - (43 511) (42 612)
Minority interest 6 708 46 026 61 737
Equity at end of year 1 160 433 1 036 685 1 153 066
ACCOUNTING POLICIES AND PRIOR YEAR ADJUSTMENTS
The interim report is prepared on the historical cost basis except for financial
instruments and certain property, plant and equipment which have been fair
valued. This is in accordance with the recognition and measurement principles of
International Financial Reporting Standards ("IFRS"), IAS 34: Interim financial
reporting, the requirements of the South African Companies Act and the Listings
requirements of the JSE Limited. The results are presented in terms of IFRS
statements and interpretations applicable at the date of publication.
CHANGE IN REPORTING FRAMEWORK
The group has adopted and applied IFRS for the first time for the year ended 30
June 2006.
The transition date is 1 July 2004 ("the transition date"). The group"s opening
IFRS balance sheet at the transition date has therefore been restated to reflect
all statements expected to be applicable at 30 June 2006. Certain accounting
policy changes and reclassifications were applied to comply with IFRS 1 and the
comparative figures for 2005 have been adjusted to reflect these changes. The
results for the year ended 30 June 2005 have been restated as unaudited, as the
IFRS adjustments have not been audited by the external auditors.
The following new accounting policies were adopted:
- Property, plant and equipment
Where components of property, plant and equipment have significantly different
useful lives, they are accounted for as separate assets. The useful lives and
residual values of all assets are assessed annually.
- Intangible assets
Acquired computer software, previously reflected in property, plant and
equipment as furniture, fittings and equipment, has now been reclassified as an
intangible asset. The useful life of computer software is assessed annually.
- Business combinations and goodwill
All business combinations are accounted for by applying the "purchase method" in
terms of IFRS 3: Business combinations. Goodwill represents amounts arising on
acquisition of subsidiaries and associates.
The group has elected to adopt the principles of IFRS 3: Business combinations,
from its initial acquisition of ATS in 1998. This has resulted in an adjustment
to goodwill raised on acquisition, deferred taxation and minority interest. The
group"s other subsidiaries are not affected by the requirements of IFRS 3.
From 1 July 2004, goodwill is stated at cost less accumulated impairment losses.
Goodwill is allocated to cash generating units and is no longer amortised but
tested annually for impairment.
- Operating leases - IAS 17
The adjustments required in terms if IAS 17 for the straightlining of operating
leases have been fully disclosed in the annual report for the year to June 2005.
The impact of this change in accounting policy on the comparative results for
the six months to Decemeber 2004 is an increase in administration expenses of
R1,2 million, with a corresponding decrease in the tax charge of R0,3 million,
resulting in a loss after tax of R0,9 million.
Reconciliations and descriptions of the effect of the transition from South
African Standards of Generally Accepted Accounting Practice to IFRS on the
group"s equity and net profit, for the different periods under review, are
provided alongside this commentary.
Jun 2005 Dec 2004 Jun 2004
Reconciliation of equity
Previously reported under
SA GAAP 1 028 998 926 750 852 573
Adjustment for adoption of
IFRS 124 068 109 935 96 915
Equity reported under IFRS 1 153 066 1 036 685 949 488
IFRS adjustments to equity:
Retained earnings 96 552 88 695 95 008
Non-distributable reserve 21 916 17 293 7 897
Minority interest 5 600 3 947 (5 990)
Total equity adjustments 124 068 109 935 96 915
IFRS adjustments to assets and
liabilities
Plant and equipment 150 726 139 386 129 169
Goodwill (2 004) (4 479) (1 841)
Accounts receivable 1 616 1 546 2 412
Deferred tax (26 270) (26 518) (32 825)
Total assets and liability
adjustments 124 068 109 935 96 915
Reconciliation of profit for
theyear ended 30 June 2005 Previously Effect IFRS
reported of IFRS restated
Operating profit before
goodwill amortisation and
capital items 208 457 7 820 216 277
Finance income 14 998 - 14 998
Finance costs (35 747) - (35 747)
Income before taxation 187 708 7 820 195 528
Taxation (41 457) 3 099 (38 358)
Net income for the period 146 251 10 919 157 170
Attributable to:
Equity holders of the parent 109 570 1 545 111 115
Minority shareholder 36 681 9 374 46 055
Net income for the period 146 251 10 919 157 170
Reconciliation of profit for
the six months ended
31 December 2004 Previously Effect IFRS
reported of IFRS restated
Operating profit before
goodwill amortisation and
capital items 97 730 2 155 99 885
Finance income 6 394 - 6 394
Finance costs (14 394) - (14 394)
Income before taxation 89 730 2 155 91 885
Taxation (19 087) 2 037 (17 050)
Net income for the period 70 643 4 192 74 835
Attributable to:
Equity holders of the parent 44 284 (3 962) 40 322
Minority shareholder 26 359 8 154 34 513
Net income for the period 70 643 4 192 74 835
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 44 Tiger Wheel & Tyre retail stores in Southern Africa - 31 owned
and 13 franchised - cover all major centres and hold a significant share of the
replacement passenger tyre and wheel aftermarket business in the region.
RESULTS OVERVIEW
The group"s disappointing results for half-year ended 31 December 2005 are
largely as forecast in the Trading Update issued on 12 December 2005, and are,
once again, a contrasting reflection of the buoyant domestic and stagnant
international markets in which the group operates. Despite revenue growth of
7,5%, operating income declined by 62,5% and headline earnings per share by
33,9%. This is as a result of the lower contribution from the group"s 74% held
international OEM alloy wheel manufacturing business - the German headquartered
ATS group.
ATS GROUP
The results for the half year have been heavily impacted by losses and reduced
sales at the newly acquired Kentucky plant. In this regard the ATS group has
instituted a warranty claim against the sellers of the Kentucky plant for R39
million (US$6,4 million). In addition, tough trading conditions have been
experienced by all the group"s manufacturing plants. The reasons include the lag
effect of higher aluminium prices, which can only be recovered from our
customers in subsequent financial periods, volatility of the order book, lower
off-take and severe "price-down" pressure from customers due to over-capacity in
our industry. The decline in operating profits was softened by the raising of a
deferred tax asset of R24,7 million in the ATS group. The headline earnings per
share adjustment of R5,9 million (9,9 cents per share) is as a result of the
closure of the Bad Durkheim plant in Germany.
In addition to all of the above, a lack of growth in European automotive
markets, the impact of the stronger Rand on the local manufacturing operations,
and small losses at the Alabama (USA) plant whose ramp-up was delayed by
hurricane Katrina, all combined to impact the half-year performance.
TRADING BUSINESSES
The domestic wholesale and retail wheel and tyre businesses did well to grow
turnover in an increasingly competitive market that is being inundated with
cheap imports easily accessed by many small traders. This has resulted in a
slight drop in margins. Due to tight cost and asset management controls, the
previous year"s earnings have been maintained. Three new sites were established
during the half-year under review.
The UK-based wholesale business, albeit small, had it"s best first half in many
years, but is still not a significant contributor to the group"s results.
PROSPECTS
ATS GROUP
The lag in the recovery of the recent approximately 12% increase in the LME
aluminium price, will once again impact the results in the second half-year.
This, when added to the tough pricing environment and the volatile order book
conditions in the automotive industry, is expected to result in second-half
earnings below those forecast previously.
In line with the ATS objective to place itself in the bottom quartile of global
costs of production, and in response to price pressures from customers, the
group has accelerated the implementation of its new, in-house-developed, process
improvement philosophy, which will be further developed and rolled out
throughout the group as a running change over the next few years. The future
benefit of the closure of the Bad Durkheim plant is a reduction in operating
costs estimated to be R15 million p.a. The planned increases in capacity at the
Polish plant, as well as at the US-based plants, are due to future customer
orders that have been committed to the group over the next 18 months. These
developments will assist ATS in achieving its productivity objectives as well as
restoring the operating margin in the medium term. No forecasts take into
account the warranty claim against the vendors of the Kentucky plant.
TRADING BUSINESSES
The South African retail business plans to establish a further two new retail
sites, in the second half bringing to five the number of new outlets anticipated
this financial year. This expansion, along with increased IT costs and margin
pressure, may prove to be a slight short-term drag on the growth of earnings in
these businesses. The significant upturn in South African car sales in recent
years should result in growth of the total size of the replacement tyre market
in the years ahead. This should also have a positive medium-term impact on
performance and is the underlying reason for the slightly more aggressive
planned growth in the number of outlets.
TIWHEEL GROUP
In summary, the indication provided in the trading update on 12 December 2005,
"that headline earnings per share for the full year will not materially vary
from those achieved in the previous financial year", is hereby revised. The
headline earnings per share for the full year are expected to be 25% to 45%
lower than in the previous year, subject, of course, to the usual caveats.
Conversely, a favourable outcome to the warranty claim against the vendors of
the Kentucky business could have a positive impact on future results.
The planned increases in output and the vigorous cost and efficiency drives in
the manufacturing business, together with the growth of the domestic trading
operations, are envisaged to restore the group"s long-standing record of
performance and growth over the next few years.
On behalf of the board
Eddie Keizan Josh Loots
Executive chairman Group financial director
Johannesburg
8 March 2006
Segmental Analysis
6 months December 2005
ATS group Balance of group
South North South
Europe Africa America Europe Africa Total
Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 738 230 195 - - 1 163
Wholesale 24 - - 117 182 323
Retail - - - - 247 247
Group services
and intergroup-
eliminations - (2) (11) - (73) (86)
Total revenue 762 228 184 117 356 1 647
Operating income
Manufacturing 25 6 (30) - - 1
Wholesale 2 - - 4 13 19
Retail - - - - 27 27
Group services
and intergroup-
eliminations (9) - - - (1) (10)
Total operating
income 18 6 (30) 4 39 37
Interest
received 3 - - - 10 13
Interest paid (12) (2) (2) - (5) (21)
Net financing
costs (9) (2) (2) - 5 (8)
Interest-bearing
debt+ 399 5 (5) (17) (33) 349
Capital
expenditure 41 1 218 1 4 265
Depreciation 36 12 18 - 3 69
Future capital
commitments
approved 49 19 70 - - 138
*Restated +Net of cash on hand .
SEGMENTAL ANALYSIS
6 months December 2004*
ATS group Balance of group
South North South
Europe Africa America Europe Africa Total
Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 818 234 75 - - 1 127
Wholesale 25 - - 99 147 271
Retail - - - - 225 225
Group services
and intergroup-
eliminations - - (15) - (75) (90)
Total revenue 843 234 60 99 297 1 533
Operating income
Manufacturing 65 11 (9) - - 67
Wholesale 1 - - - 14 15
Retail - - - - 27 27
Group services
and intergroup-
eliminations (7) 89 - - (91) (9)
Total operating
income 59 100 (9) - (50) 100
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 12 7 1 5 54
Future capital
commitments
approved 52 16 23 - 1 92
*Restated +Net of cash on hand .
SEGMENTAL ANALYSIS
Year ended 30 June 2005*
ATS group Balance of group
South North South
Europe Africa America Europe Africa Total
Rm Rm Rm Rm Rm Rm
Revenue
Manufacturing 1 689 434 155 - - 2 278
Wholesale 59 - - 222 287 568
Retail - - - - 439 439
Group services
and intergroup-
eliminations - (9) (36) - (137) (182)
Total revenue 1 748 425 119 222 589 3 103
Operating income
Manufacturing 153 12 (24) - - 141
Wholesale 5 - - 2 25 32
Retail - - - - 44 44
Group services
and intergroup-
eliminations (11) 85 - - (75) (1)
Total operating
income 147 97 (24) 2 (6) 216
Interest
received 3 - - 1 11 15
Interest paid (15) (2) (6) (1) (12) (36)
Net financing
costs (12) (2) (6) - (1) (21)
Interest-bearing
debt+ 108 36 27 (5) (1) 165
Capital
expenditure 127 17 25 - 13 182
Depreciation 66 23 14 1 12 116
Future capital
commitments
approved 104 28 52 - 4 188
*Restated +Net of cash on hand .
DIRECTORS:
Eddie Keizan (Executive chairman) Phillip Vallet* (Deputy chairman and chairman
of the board), Martin Glatt*, Rainer Hagemann** (German), Josh Loots, Mike
Groves**, Keith Rivers, Siegfried Teichert (German), Brian Joffe*, Brand
Pretorius (Alternate to Brian Joffe)
*Non-executive **Independent non-executive
COMPANY SECRETARY:
Marco Nel (marco@tiw.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
08 March 2006
SPONSOR:
Sasfin Capital
(a division of Sasfin Bank Limited)
Registration number 1951/002280/06
Date: 08/03/2006 03:00:19 PM Produced by the JSE SENS Department
