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MML
MML
Metmar - Unaudited interim financial results: six months ended 31 August 2006
Metmar Limited
(Formerly Heritage Collection Holdings Limited)
("Metmar" or "the Company")
Incorporated in the Republic of South Africa
Registration Number 1998/007269/06
Share Code: MML
ISIN Code: ZAE000078747
Highlights
* Revenue up by 16,3%
* Profit after taxation up by 37,4%
* Headline earnings up by 41,8%
Unaudited Interim Financial Results for the six months ended 31 August 2006
CONDENSED GROUP INCOME STATEMENTS
Metmar Limited Metmar Trading
(Pty) Limited
Six months Year ended
ended
31 August 2006 28 February 2006
Unaudited Audited
(R"000) (R"000)
Revenue 727 713 1 250 859
Cost of sales (664 451) (1 173 349)
Gross profit 63 262 77 510
Other income 7 937 17 923
Operating expenses (32 130) (36 600)
Operating profit 39 069 58 833
Finance costs (7 149) (11 096 )
Profit before taxation 31 920 47 737
Taxation (9 274) (14 778)
Profit for period/year 22 646 32 959
CONDENSED GROUP BALANCE SHEETS
Metmar Limited Metmar Trading
(Pty) Limited
as at as at
31 August 2006 28 February 2006
Unaudited Audited
(R"000) (R"000)
Assets
Non-current assets
Property, plant and 15 313 11 085
equipment
Intangible asset - 6 407 5 668
goodwill
Financial assets 1 613 1 558
Deferred tax 1 824 826
25 157 19 137
Current assets
Inventories 86 146 28 790
Trade and other 162 327 138 603
receivables
Cash balances with banks 39 211 42 264
287 684 209 657
Total assets 312 841 228 794
Equity and liabilities
Capital and reserves 74 543 72 350
Non-current liabilities
Interest bearing 3 768 2 971
borrowings
Other financial - 4 387
liabilities
3 768 7 358
Current liabilities
Trade and other payables 92 688 96 954
Financial liabilities 6 276 299
Current tax payable 13 060 7 550
Bank overdrafts 122 506 44 283
234 530 149 086
Total liabilities 238 298 156 444
Total equity and liabilities 312 841 228 794
Proforma*
Unaudited
Net asset value per share 41,94 41,26
(cents)
Net tangible asset value per 38,29 38,03
share (cents)
Number of shares in issue 175 362 058 175 362 058
* For comparative purposes the same number of ordinary shares in issue
as at 31 August 2006 has been used in this calculation.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Metmar Limited Metmar Trading
(Pty) Limited
Six months Year ended
ended
31 August 2006 28 February 2006
Unaudited Audited
(R"000) (R"000)
Cash flows from operating
activities
Cash (absorbed by)/generated (49 259) 43 385
from operations
Interest received 1 071 2 162
Finance costs (7 149) (11 028)
Taxation paid (4 538) (9 368)
Net cash flows from (59 875) 25 151
operating activities
Cash flows from investing 1 237 (804)
activities
Cash flows from financing
activities
Repayment of non-current (1 460) (136)
liabilities
Distribution to shareholders (17 537) (14 733)
Net cash flows from (18 997) (14 869)
financing activities
Total cash movement for (77 635) 9 478
period/year
Cash and cash equivalents at
beginning of period/year
- Metmar Trading (Pty) (2 018) (11 496)
Limited
- Other subsidiaries (3 642) -
acquired
Cash and cash equivalents at (83 295) (2 018)
end of period/year
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Foreign
currency -
Share Share Trans- Revalua
lation tion
capital premium reserve reserve
(R"000) (R"000) (R"000) (R"000)
Balance at 1 March 2005 1 721 (275) 945
Profit for the year - - - -
Distribution to - - - -
shareholders
Currency translation - - 275 (945)
differences
Minority interest - - - -
Balance at 1 March 2006 1 721 - -
Profit for the period - - - -
Distribution to - - - -
shareholders
Share issue expenses - - - -
Goodwill 717 - - -
Revaluation reserve - - - 223
Currency translation - - (90) -
differences
Balance at 31 August 718 721 (90) 223
2006
CONDENSED STATEMENT OF CHANGES IN EQUITY
Total
capital
Retained Minority and
earnings interest reserves
(R"000) (R"000) (R"000)
Balance at 1 March 2005 53 357 35 54 784
Profit for the year 32 958 - 32 958
Distribution to (14 733) - (14 733)
shareholders
Currency translation 24 - (646)
differences
Minority interest - (13) (13)
Balance at 1 March 2006 71 606 22 72 350
Profit for the period 22 646 - 22 646
Distribution to (17 537) - (17 537)
shareholders
Share issue expenses (3 766) - (3 766)
Goodwill - - 717
Revaluation reserve - - 223
Currency translation - - (90)
differences
Balance at 31 August 2006 72 949 22 74 543
COMMENTARY ON INTERIM RESULTS
PROFILE AND STRUCTURE
The Metmar group"s main operating company is Metmar Trading (Pty) Limited
("Metmar Trading"), which trades in the importation and exportation of bulk
commodities including metals, minerals, ferro alloys, carbon products,
plastics and chemicals.
On 8 May 2006, Metmar Trading was reversed into a dormant JSE-listed shell,
Heritage Collection Holdings Limited, the name of which was changed to Metmar
Limited.
Simultaneously Metmar acquired a manufacturing company, Matrix Metals (Pty)
Limited (69,1% owned), together with two property companies, Metmar Properties
(Pty) Limited (100% owned) and Hornet Properties (Pty) Limited (90% owned),
which house the group"s main office and its manufacturing plants.
The group"s results for the six months ended 31 August 2006 include those of
the Company, together with all its subsidiaries from their respective dates of
acquisition.
As Metmar Trading was a private company prior to the reverse listing on the
JSE, it was not required to produce half-yearly financial statements. The
disclosed comparative figures given in this report are therefore the audited
results of Metmar Trading for the full financial year ended 28 February 2006.
Due to the non-cyclical nature of Metmar group"s earnings, it is reasonable to
assume that half of these profits would have accrued in the first six months
of the financial year ended 28 February 2006.
FINANCIAL PERFORMANCE
The Metmar group is pleased to report continued strong growth in pre-tax
profit during the first six months of the current financial year which
increased by 33,7% from R23 868 000 to R31 920 000. Headline earnings per
ordinary share increased by 41,7% from 9,11 cents to 12,91 cents.
Because of re-scheduled shipments, borrowings increased due to pre-shipment
financing of inventories, which resulted in the negative cash flow from
operations. By the end of September 2006 the situation had normalised.
OPERATIONAL PERFORMANCE AND PROSPECTS
Despite the volatility in the metals prices for the first half of the year,
trading conditions remained robust. Most London Metal Exchange base metals
prices are currently higher than future prices (backwardation) with strong
near term demand. Healthy consumption across the full spectrum of commodities
is expected to continue during the second half of the year. Recent rand
weakness has impacted favourably on export earnings.
Manufacturing operations showed an improvement mainly as a result of higher
metals prices.
A number of initiatives are underway:
- Kalahari Resouces (Pty) Limited, a manganese mining company in which the
Metmar group has a 10% stake, has completed the drilling of half of the
feasibility exploration holes in the Kalahari Basin in the Northern Cape.
- Negotiations are nearing completion with a consortium to acquire an equity
interest in a metal producer in Central Africa to secure additional supplies
of metal.
- Plant and equipment has been assigned to a screening project in Zimbabwe in
exchange for marketing rights and the first sales have been made.
Discussions are underway in respect of equity participation with a number of
Black Economic Empowerment entities.
DISTRIBUTION TO SHAREHOLDERS
A distribution of 10 cents per ordinary share was made in July 2006 in respect
of Metmar Trading"s 2006 financial year and a distribution will be made after
the end of the 2007 financial year for that year.
NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS
1. Basis of preparation
The unaudited consolidated interim financial results have been prepared in
accordance with International Reporting Standards ("IFRS"), IAS34: "Interim
Financial Reporting", the South African Companies Act, as amended, and the JSE
Listings Requirements. The principal accounting policies used in the
preparation of the financial results for the period ended 31 August 2006 are
consistent with those applied for the year ended 28 February 2006. The
unaudited interim financial results of Metmar represent the continuation of
the financial statements of the legal subsidiary, Metmar Trading, per Appendix
B of IFRS 3 - Business Combinations. Comparative results are the audited
consolidated financial statements of Metmar Trading for the year ended 28
February 2006.
2. Reconciliation between profit and headline earnings
Metmar Limited Metmar Trading
(Pty) Limited
Six months Year ended
ended
31 August 2006 28 February
2006
Unaudited Audited
(R"000) (R"000)
Profit for the 22 646 32 959
period/year
Adjustments for:
- loss on disposal of 1 204
property, plant and
equipment after taxation
- loans written back - (1 214)
Headline earnings 22 647 31 949
Proforma*
Unaudited
Earnings per share
(cents)
- Headline 12,91 18,22
- Attributable 12,91 18,79
Weighted average number 175 362 058 175 362 058
of shares in issue
* For comparative purposes the same weighted average number of shares
in issue has been used in this calculation.
3. Cash and cash equivalents
Cash and cash equivalents comprise bank overdrafts, less cash balances with
banks.
4. Related party transactions
During the period, the Company and its subsidiaries in the ordinary course of
business, entered into various transactions with their associates. These
transactions were subject to terms that were no less favourable than those
arranged with third parties.
5. Corporate governance
The Metmar group complies with the code of Corporate Practice and Conduct
published in the King II Report on Corporate Governance.
6. Post-balance sheet events
No material events have occurred between the balance sheet date and the date
of these unaudited interim financial results that would have a material effect
on the financial statements of the Metmar group.
L Boyd D J Ellwood
Non-Executive Chairman Chief Executive Officer
13 November 2006
Directors
L Boyd* (Chairman), D J Ellwood (Chief Executive Officer), P P Boshoff, C B
Brayshaw*, G R Forsdyke, G P Lotis, D Mashile-Nkosi*, A P Ruiters*, M F de Wet
(Alt)
* Non-executive
Company Secretary
M R D Boyns (British)
Registered office
24 Sloane Street, Bryanston, 2191
(P O Box 98549, Sloane Park, 2152)
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
(P O Box 61051, Marshalltown, 2107)
Sponsor
BDO QuestCo (Pty) Limited
Auditors
Grant Thornton
These results may be viewed on the internet on http://www.metmar.com
Date: 13/11/2006 02:00:59 PM Produced by the JSE SENS Department
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