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WES
WES
Wesco - Interim report for the six months ended 30 September 2006
Wesco Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1968/005871/06
JSE share code: WES
ISIN: ZAE000007928
("Wesco", "the group" or "the company")
Interim report for the six months ended 30 September 2006
CONDENSED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended Change ended ended
30 Sept. % 30 Sept. 31 Mar.
R000 2006 2005 2006
Income 4 427 (50.1) 8 879 15 565
Administrative expenses (2 560) (17.9) (2 171) (4 329)
Operating profit 1 867 (72.2) 6 708 11 236
Share of associates" 25 140 (84.2) 158 689 245 391
income
Profit before taxation 27 007 (83.7) 165 397 256 627
Income tax expense (11 873) (680.6) (1 521) (9 187)
Profit for the period 15 134 (90.8) 163 876 247 440
Attributable to:
Equity holders of the 14 287 (91.2) 163 053 245 903
company
Minority interest 847 (2.9) 823 1 537
15 134 (90.8) 163 876 247 440
Per share analysis - cents
Basic earnings and diluted 169 (91.2) 1 931 2 913
earnings
Attributable share of (64)
adjustment to basic
earnings by an associate
Headline earnings 169 (90.9) 1 867 2 913
Dividends declared and 1 200 100.0 600 400
paid
CONDENSED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Sept. 30 Sept. 31 Mar.
R000 2006 2005 2006
Dividends received 112 445 50 497 52 399
Interest received 3 026 7 269 12 173
Dividends paid (101 302) (50 651) (202 603)
Taxation paid (203) (2 163) (20 526)
Other operating cash flows (1 186) (1 392) (3 464)
Net cash flows in operating 12 780 3 560 (162 021)
activities
Available-for-sale financial (1 951) (48 029) 92 804
assets realised (acquired)
Increase (decrease) in cash 10 829 (44 469) (69 217)
and cash equivalents
Cash and cash equivalents at 39 039 52 958 28 210
end of the period
CONDENSED GROUP BALANCE SHEET
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 Mar.
R000 2006 2005 2006
Assets
Non-current assets 1 428 836 1 431 444 1 438 201
Investment in associates 1 425 180 1 427 737 1 423 104
Property and equipment 3 656 3 707 3 662
Deferred taxation 11 435
Current assets 235 079 353 913 300 590
Total assets 1 663 915 1 785 357 1 738 791
Equity and liabilities
Capital and reserves 1 639 949 1 768 238 1 717 825
Minority interest 9 440 8 445 9 162
Deferred taxation 12 796 7 602 10 754
Current liabilities 1 730 1 072 1 050
Total equity and liabilities 1 663 915 1 785 357 1 738 791
Net asset value per share - 19 427 20 946 20 349
cents
Number of ordinary shares in 8 441.8 8 441.8 8 441.8
issue (000)
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Sept. 30 Sept. 31 Mar.
R000 2006 2005 2006
Share capital
Balance at beginning and end 11 752 11 752 11 752
of the period
Non-distributable reserves 1 289 231 1 262 168 1 275 031
Balance at beginning of the 1 275 031 1 101 996 1 101 996
period
Net fair value adjustments to 12 045 23 441 41 985
available-for-sale
investments
Dilution of interest in (2 644) (1 934) (1 935)
associate
Movement in associates" (262) 55 201
reserves
Transfer from retained 5 061 138 610 132 784
earnings
Retained earnings 338 966 494 318 431 042
Balance at beginning of the 431 042 520 526 520 526
period
Profit for the period 14 287 163 053 245 903
Dividends paid (101 302) (50 651) (202 603)
Transfer to non-distributable (5 061) (138 610) (132 784)
reserves
Total capital and reserves 1 639 949 1 768 238 1 717 825
Minority interest 9 440 8 445 9 162
Balance at beginning of the 9 162 8 175 8 175
period
Profit for the period 847 823 1 537
Dividends paid (493) (493) (493)
Other movements (76) (60) (57)
Total equity 1 649 389 1 776 683 1 726 987
NOTES TO THE INTERIM REPORT
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. These accounting
policies are consistent with those used in the preparation of the annual
financial statements for the year ended 31 March 2006.
The group had adopted IFRS in the comparative period, with effect from 1 April
2004. Resulting adjustments to opening balances as reported in the 2005 interim
report were based on best estimates at the time of preparation thereof.
Comparative amounts in this report have been restated to the amounts as finally
determined in the annual financial statements for the year ended 31 March 2006.
COMMENT
Results
Toyota South Africa (Pty) Ltd
Total vehicle sales in the domestic market for the calendar year to September
numbered 534 168 units, an increase of 16.8% on the comparative period. Toyota
SA achieved sales of 110 292 units, maintaining its market share at 20.6%.
As previously reported, Toyota SA is in a phase of substantial expansion leading
up to its current targeted annual production of 220 000 units, with an
anticipated initial negative effect on profitability. Investment in the new
Hilux, launched during the second quarter of last year, amounted to R2.4
billion, and a new, low emission water-based paint plant was commissioned during
October 2006 at a cost exceeding R1 billion. Production of a second high volume
model is planned to start in 2007. Utilisation of these new facilities will
gradually increase, with the daily equivalent of targeted production volumes
expected to be reached during 2008.
Toyota"s domestic sales during the period under review improved by 17.7%, with
growth predominantly in low margin business. Exports almost doubled to 19 121
units but at adverse Rand exchange rates. Operating margins were further
affected by substantial overhead expenditure in preparation for planned
increased production, and in order to produce quality volumes during the
necessarily disruptive activity of expansion at plant level. Capital
expenditure, largely funded by borrowings, resulted in finance costs increasing
to R97.9 million from R30 million in the comparative period.
The combined effect of these factors resulted in Toyota SA recording a loss of
R36.8 million for the six months under review. Wesco"s share thereof amounts to
R9.2 million.
Metair Investments Ltd
Metair"s results for the six months ended 30 June 2006 were published and fully
reported on earlier. The group"s share of Metair"s basic earnings accounted for
in the period under review improved marginally from R33.4 million to R34.3
million. Diluted headline earnings, as adjusted for profit on disposal of Metair
interests in subsidiaries, increased by 21%.
Other investments
Income reduced as result of lower interest-bearing investments following payment
of a special dividend in January 2006. Unrealised gains on revaluation of
available-for-sale financial assets on the reporting date amounted to R12
million (30 September 2005: R23.4 million). These gains are dealt with directly
in equity.
Outlook
Toyota SA is expected to return to profitability in the second half of the year,
but with weaker results for the full year than in 2006.
Metair is reasonably positive about their short-term outlook in view of strong
domestic demand, but margins will remain under pressure. The associate expects
its results for the full year to show a slight improvement on the previous year.
DIVIDEND
It is Wesco"s policy to declare a dividend annually in respect of a full year"s
earnings.
ANNOUNCEMENTS
Shareholders are referred to the company"s cautionary announcement dated 9
November 2006.
On behalf of the board
E Le R BRADLEY
Non-executive Chairman
G J STRYDOM
Chief Executive Officer
Johannesburg
4 December 2006
WESCO INVESTMENTS LIMITED
Directorate
Executive director
G J Strydom (Chief Executive Officer)
Independent non-executive director
R S Broadley
Non-executive (non-independent) directors
E Le R Bradley (Chairman), A D Plummer (British), P R Robinson
Company Secretary
F D W Peachey
Registered office
Wesco House, 10 Anerley Road, Parktown, Johannesburg
Telephone 011 646 3011
Facsimile 011 646 3022
Postal address
P O Box 2077, Saxonwold 2132
Registrar
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street, Johannesburg
(P O Box 61051, Marshalltown 2107)
Sponsor
Arcay Moela Sponsors (Pty) Ltd
4th Floor, South Office Tower, Hyde Park Corner, Hyde Park, Johannesburg
(P O Box 41966, Craighall 2024)
Auditors
PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill, Johannesburg
(Private Bag X36, Sunninghill 2157)
Date: 04/12/2006 05:15:13 PM Produced by the JSE SENS Department
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