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MTA
MTA
Metair - Interim Report for the 6 months ended 30 June 2006
METAIR INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Reg.No. 1948/031013/06)
Share code: MTA
ISIN Code: ZAE000004743
Interim Report for the 6 months ended 30 June 2006
GROUP INCOME STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
R"000 % R"000 R"000
Unaudited Change Unaudited Audited
Revenue 1 205 375 22,6 982 964 2 151 020
Trading profit 297 827 (22,8) 242 485 507 031
Depreciation and (26 067) (26,6) (20 583) (48 787)
amortisation
Gross profit 271 760 22,5 221 902 458 244
Other operating income 8 763 (74,9) 34 934 50 175
Distribution, administrative (142 439) (8,9) (130 777) (261 511)
and other expenses
Operating profit 138 084 9,5 126 059 246 908
Fair value adjustments on 116 108,6 (1 346)
financial instruments
Finance 2 153 (192,1) 737 4 234
Impairment of investment in (12 906)
associate company
Share of results of 3 966 201,1 1 317 3 236
associates
Profit before tax 144 319 13,8 126 767 241 472
Income tax expense (47 273) (25,6) (37 629) (70 388)
Profit for the period 97 046 8,9 89 138 171 084
Attributable to:
Equity holders of the 88 182 4,0 84 793 158 428
company
Minority interest 8 864 104,0 4 345 12 656
97 046 8,9 89 138 171 084
Earnings per share for
profit attributable to the
equity holders of the
company (cents)
Basic earnings per share 1 466 3,1 1 422 2 648
Loss on disposal of 33 5
property, plant and
equipment
Impairment of investment in 215
associate company
Profit on disposal of (40) (85,1) (272) (271)
interest in subsidiary
Headline earnings per share 1 426 20,5 1 183 2 597
Diluted earnings per share
(cents)
Basic earnings per share 1 461 3,7 1 409 2 611
Headline earnings per share 1 422 21,0 1 175 2 562
Dividend per share (cents) 850 850 850
Number of shares in issue 6 066 5 995 5 995
(`000)
Weighted number of ordinary 6 014 5 961 5 984
shares in issue (`000)
Adjustment for dilution due 69 129 125
to share options (`000)
Weighted number of ordinary 6 083 6 090 6 109
shares in issue used for
dilution calculation (`000)
GROUP CASH FLOW STATEMENTS
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
R"000 R"000 R"000
Unaudited Unaudited Audited
Net cash available 6 923 (23 638) 82 089
from/(utilised in) operating
activities
Net cash used in investing (72 894) (25 902) (69 336)
activities
Net cash inflow/(outflow) from 17 847 (1 404) (14 645)
financing activities
Net decrease in cash and cash (48 124) (50 944) (1 892)
equivalents
Cash and cash equivalents at 244 988 230 434 230 434
beginning of period
Cash and cash equivalents at end 196 864 179 490 228 542
of period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capi- Share- Attri-
tal, based Non- butable
premium pay- dis- to
and ment tribu- equity Minor-
trea- res- table holders ity
sury Retained erve res- of the inte- Total
shares earnings R"000 erves company rest equity
R"000 R"000 R"000 R"000 R"000 R"000
Balance 35 955 893 084 1 831 12 389 943 259 43 651 986 910
at 1
January
2006
Disposal 17 638 17 638
of 25,1%
interest
in subsi-
diary
Profit 88 182 88 182 8 864 97 046
for the
period
Ordinary 4 141 4 141 4 141
shares
issued
Treasury (1 050) (1 050) (1 050)
shares
Share- 360 360 22 382
based
payment
reserve
Dividends (51 316) (230) (51 546) (5 739) (57 285)
Transfer (1 440) 1 440
Balance 39 046 928 510 2 191 13 599 983 346 64 436 1 047 782
at 30
June 2006
GROUP BALANCE SHEETS
30 June 30 June 31 December
2006 2005 2005
R"000 R"000 R"000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 546 027 488 370 502 118
Intangible assets 12 746 5 979 11 676
Investments in associate 16 392 29 756 18 249
companies
Other non-current assets 39 464 35 000 35 000
Deferred taxation 1 475 316 9 094
616 104 559 421 576 137
Current assets
Inventories 321 361 299 321 309 486
Receivables and prepayments 324 988 282 729 248 428
Other financial assets at fair 43 383 130 001 95 964
value
Cash and cash equivalents 161 783 73 609 139 011
851 515 785 660 792 889
Total assets 1 467 619 1 345 081 1 369 026
EQUITY AND LIABILITIES
Capital and reserves
Share capital, premium and 39 046 35 955 35 955
treasury shares
Share-based payment reserve 2 191 1 450 1 831
Non-distributable reserves 13 599 21 614 12 389
Retained earnings 928 510 810 225 893 084
Ordinary shareholders" equity 983 346 869 244 943 259
Minority interest 64 436 35 340 43 651
Total equity 1 047 782 904 584 986 910
Non-current liabilities
Interest bearing borrowings 43 099 58 064 53 252
Post-employment medical 15 134 13 499 14 681
benefits
Deferred taxation 52 125 44 887 58 205
110 358 116 450 126 138
Current liabilities
Trade and other payables 260 309 262 700 210 875
Borrowings 16 268 18 146 15 829
Taxation 12 392 10 326 9 687
Provisions for liabilities and 12 208 8 755 13 154
charges
Bank overdrafts 8 302 24 120 6 433
309 479 324 047 255 978
Total liabilities 419 837 440 497 382 116
Total equity and liabilities 1 467 619 1 345 081 1 369 026
Net asset value per share 17 273 15 089 16 462
(cents)
Capital expenditure 67 904 67 990 119 979
Capital commitments
- contracted 63 530 64 510 60 537
- authorised but not 53 012 42 177 39 728
contracted
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
Accounting policies
These consolidated condensed interim financial statements are prepared in
accordance with IAS34, Interim Financial Reporting. The accounting policies
used in the preparation of the interim financial statements are consistent
with those used in the annual financial statements for the year ended 31
December 2005.
Contingencies
The bank and other guarantees given by the Group to third parties amounted
to R40,7 million as at 30 June 2006 (R40,7 million as at 30 June 2005).
Borrowings 30 June 30 June 31 December
2006 2005 2005
R"000 R"000 R"000
Current 16 268 18 146 15 829
Non-current 43 099 58 064 53 252
Total 59 367 76 210 69 081
The movement in the borrowings can
be analysed as follows:
Six months ended June 2006
Opening amount (69 081)
Repayments 9 814
Amounts raised (100)
Closing amount (59 367)
Fair value adjustments on 30 June 30 June 31 December
financial instruments 2006 2005 2005
R"000 R"000 R"000
Foreign exchange (losses)/gains
arising from:
Forward exchange contracts and (129) (345)
other financial instruments
Translation of foreign currency 13 (1 001)
monetary items
Total (116) (1 346)
OPERATING RESULTS
For the period under review the Group turnover was 22,6% above the first six
months of 2005 and marginally above the second six months due to strong
domestic demand. Gross profit for the period increased by a similar
percentage due to the higher volume and effective cost control.
Other operating income for the period amounted to R8,8 million compared to
R34,9 million in the previous period. Included herewith is the profit of
R2,4 million on the sale of 25,1% interest in Hesto Harnesses to Yazaki in
April 2006. The comparative period in 2005 included a profit of R16,2
million on the sale of 25% interest in Smiths Manufacturing to Denso
Corporation.
Interest received as included in finance increased as the net cash position
improved to R137,5 million compared to R103,3 million in June 2005.
Headline earnings per share increased by 20,5% to 1 426 cents per share
compared to 1 183 cents per share in 2005. A reduction in other income as
commented on above resulted in an after tax profit increase of 8,9% to R97,0
million. Net profit to equity holders increased by 4% to R88,2 million due
to the increase in minority interest.
The growth in minority interest to R8,9 million on the income statement and
to R64,4 million on the balance sheet reflects Yazaki"s 25,1% share in Hesto
and the full six months effect of the Denso minority interest in Smiths
Manufacturing.
On the balance sheet the effect of the additional investments made can be
seen in the capital expenditure of R67,9 million in property, plant and
equipment. Further capital expenditure in the amount of R116,5 million has
also been committed to meet the increased volume demand expected towards the
end of 2007 and beginning 2008. This expenditure can be funded by internal
cash flows. Inventory and debtors were well controlled and in line with
increased turnover.
The Group has benefited from the increased demand and improved utilisation
of facilities, but also felt the effect of lower margins associated with new
business.
The dramatic increase in raw material prices (particularly copper and
aluminium) during this period underpins the Metair strategy to convert
licence agreements with licensors into working minority equity relationships
as the need to design commodities out of products becomes a pre-requisite.
This strategy will continue going forward for subsidiaries that do not have
globally competitive in-house design and technical capabilities. The target
is to complete the process prior to the next step in volume increase in
2008.
The short-term outlook is reasonably positive with strong domestic demand
but with a real challenge to recover steep increases in commodity prices
from customers. With this, and the dilution of Hesto income, the headline
earnings for the Group for the second six months of 2006 are expected to be
marginally less than those achieved in the first six months but the outlook
for the year 2006 indicates a slight improvement compared to 2005.
Signed on behalf of the board
A D Plummer - ChairmanC T Loock - Managing Director
Johannesburg, 21 August 2006
REGISTRARSComputershare Investor Services 2004 (Pty) Limited70 Marshall
StreetJOHANNESBURG2001
SPONSORLPC Manhattan Moela (Pty) Limited
EXECUTIVE DIRECTORS: C T Loock (Managing); C I J van der Merwe (Finance)NON-
EXECUTIVE DIRECTORS: A D Plummer (Chairman)*; E le R Bradley;
G J StrydomINDEPENDENT NON-EXECUTIVE DIRECTORS: R S Broadley; L
Soanes*COMPANY SECRETARY: S M Vermaak*British
Date: 21/08/2006 05:10:07 PM Produced by the JSE SENS Department
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