| Thu 15 Mar 2007, 6:59 | | MTA - Metair - Abridged Audited Results for the Ye |
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MTA
MTA
MTA - Metair - Abridged Audited Results for the Year Ended 31 December 2006
METAIR INVESTMENTS LTD
(Incorporated in the Republic of South Africa)
Reg no: 1948/031013/06
Share code: MTA
ISIN: ZAE000090692
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Key features
Group turnover increased by 23% to R2 642 million (2005: R2 151 million)
Attributable profit after tax increased by 28% to R203.2 million (2005: R158.8
million)
HEPS increased by 27% to 3317 cents (2005: 2603 cents)
Sales of components to OEs up 20% to R1 347 318 - 51% of group turnover
Automotive division gained market share in replacement market
Non-automotive sales growth in resources, logistics chain and industrial
applications
Theo Loock MD of Metair commented: "We are pleased with this strong set of
results showing good growth at the top and bottom line. We have invested
significantly to meet rising demand in the automotive and non-automotive
sectors. Growth in the automotive sector is expected to slow in 2007 due to a
series of model changes planned before picking up again in 2008, also benefiting
from growing export volumes. Our objective is to use our balance sheet to pursue
opportunities in the South African automotive component manufacturing sector to
create sufficient economies of scale to improve our global competitiveness."
Shareholders and other interested parties are invited to join a conference call
hosted by Metair management at 11am today (15 March 2007).
The dial-in numbers are as follows:
SA Toll +27.11.535.3600
SA Toll Free 0800.200.648
Enquiries
Metair Investments 011 646 3011
Theo Loock, MD 082 900 1376
Callie van der Merwe, FD 082 926 9195
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
COMMENTS
Nature of operations
Metair was registered in 1948. Metair comprises of 7 operating subsidiaries and
2 associate companies that manufacture and distribute products predominantly for
the automotive industry. Products manufactured include heating and cooling
systems, shock absorbers, springs, lead batteries, lighting and signaling
devices, plastic mouldings, front end modules, wiring harnesses, electric motors
and automotive cables. Products are supplied to South African assemblers of new
vehicles (OEM`s), the replacement market and a proportion of output is exported.
Results
Headline earnings per share for the full year were 3 317 cents compared to 2 603
cents achieved in the previous financial year. This represents an increased of
27,4%. Headline earnings for the second six months were 1 891 cents compared to
1 420 cents achieved for the comparable period of 2005 - an increase of 33.2%.
Group turnover increased by 23% to R2 642 million compared to R2 151 million in
2005. Profit after tax attributable to ordinary shareholders increased to
R203,2 million from R158,8 million. Cash generated from operations was R242,3
million in 2006 compared to R203,4 million in 2005.
A dividend of 40 cents per share (the equivalent of 1000 cents per share before
the subdivision) has been declared in respect of 2006 compared to 34 cents per
share (the equivalent of 850 cents per share before the subdivision) declared in
respect of 2005. The dividend cover has been increased as the company intends
to retain cash to pursue expansion opportunities.
The Group`s ROE was 19,7%.
Review of operations
Total domestic vehicle production was 587 719 vehicles compared to 525 227
vehicles in 2005. All of the group`s subsidiaries are dependent on the demand
for locally produced components built into locally produced vehicles. Trading
conditions for exports improved over the period with the Rand weakening from
6.06 to the dollar in the beginning of the period to an average 7.18 to the
dollar in the last quarter.
Capital expenditure of R166.3 million was incurred during the period under
review. The capital expenditure will facilitate the increase in export volumes
in light commercial vehicles and the introduction of new models planned for mid
2007. Budgeted capital expenditure in the group will reduce from the high level
of the past two years to R90 million in 2007. A significant portion of the
budgeted capital expenditure for 2007 is geared towards creating capacity in
First National Battery for non-automotive as well as automotive aftermarket
products.
The focus on continuous improvement programs and lean manufacturing concepts
based on Japanese Production Systems enjoyed increased attention during the year
with the objective of reducing costs and improving delivery and quality. The
objective of Metair is to improve its global competitiveness in 2007 by
resetting the cost base to be in line with competitive component manufacturers
in developing countries. In view of increased export volumes, quality and safety
requirements increased in this period and will continue to be a focus area.
The business model for subsidiaries with joint venture partners will continue to
focus on global competitiveness and improvement of efficiencies to achieve
globally benchmarked production, delivery and quality standards. The ability of
these joint venture partners to design innovative products with improved
functionality and commodity usage is key to Metair`s participation in new high
volume business.
Corporate activity
In December 2006 Wesco Investments Limited and the Wessels family disposed of
their entire shareholding in Metair to Coronation Capital Limited, Royal
Bafokeng Holdings and the Metair Share Incentive Trust. On 3 April 2006 Yazaki
Corporation became a 25,1% shareholder in Hesto Harnesses.
With effect from 5 March 2007 Metair shares were subdivided 25 times from having
a par value of 50 cents per share to 2 cents per share.
Directorate
During the period Messrs Gavan Ryan and Allan Joffe joined the board as non-
executive directors.
Prospects
Industry
The overall prospects for the automotive industry remain positive for 2007 on
the back of continued GDP growth. Industry automotive production remains on
target to expand further during 2007 as a result of higher exports and is
projected to reach 662 000 vehicles - an improvement of 13% over 2006 domestic
production of 587 719 vehicles.
Two high volume locally produced vehicles will run out in 2007 and new
replacement models will be launched. The new model launches will have the
effect that for a period of between 6 weeks and 12 weeks respectively no
production will be required for components on these models.
Group
2007 will be a challenging year as Metair establishes the foundation for the
volume increase expected in 2008 and 2009 when OEM`s put into production their
newly installed capacity. Subsidiaries that have significant exposure to the
new models planned to be launched in 2007 will have difficulty in achieving 2006
performance levels with full capacity utilisation only taking effect in the
beginning of 2008.
The group is pursuing a number of opportunities that it hopes will add to the
economies of scale of the underlying operations.
The industry is awaiting Government`s announcement in regard to the continuation
of the Motor Industry Development Programme. We anticipated that minor focus
adjustments will increase requirements for locally produced components.
The exchange rate remains a determining factor in terms of overall
competitiveness and profitability of the Group.
Appreciation
The Group would like to express our sincere appreciation for the leadership and
contribution from the Wessels family and Elisabeth Bradley over the years.
Employees and management are thanked for their continued efforts during 2006.
ABRIDGED GROUP INCOME STATEMENTS
31 December 2006 31 December 2005
R`000 R`000
Revenue 2 641 911 2 151 020
Cost of sales (2 050 455) (1 692 776)
Gross profit 591 456 458 244
Other operating income 30 142 50 698
Distribution, administrative and (310 361) (261 511)
other expenses
Operating profit 311 237 247 431
Interest income 13 440 14 338
Interest expense (6 846) (10 104)
Share of results of associates 7 100 3 236
Impairment of investment in (12 906)
associate company
Profit before taxation 324 931 241 995
Taxation (98 388) (70 540)
Profit for the year 226 543 171 455
Attributable to:
Equity holders of the Company 203 240 158 799
Minority interest 23 303 12 656
226 543 171 455
Depreciation and amortisation 56 509 48 787
Reconciliation:
Earnings per share (cents)
Basic earnings per share 3 359 2 654
(Profit)/loss on disposal of (2) 5
property, plant and equipment
Impairment of investment in 215
associate company
Profit on disposal of investment (40) (271)
Headline earnings per share 3 317 2 603
Diluted earnings per share
(cents)
Basic earnings per share 3 329 2 617
Headline earnings per share 3 288 2 568
Dividend per share (cents) 850 850
Number of ordinary shares in 6 066 5 995
issue (`000)
Weighted average number of 6 050 5 984
ordinary shares in issue (`000)
Adjustment for dilution due to 79 125
share options (`000)
Weighted average number of 6 129 6 109
ordinary shares in issue used
for dilution calculation (`000)
ABRIDGED GROUP CASH FLOW STATEMENTS
31 December 2006 31 December 2005
R`000 R`000
Operating activities
Profit before taxation 324 931 241 995
Non-cash items 37 247 38 857
Working capital changes (119 915) (77 492)
Cash generated from operations 242 263 203 360
Finance charges (6 846) (10 104)
Investment income 13 440 14 338
Taxation paid (89 857) (74 434)
Dividends paid (57 055) (51 071)
Dividend income from associate 416
Net cash inflow from operating 102 361 82 089
activities
Investing activities
Proceeds on disposal of interest 20 080 47 000
in subsidiary
Net cash used in other investing (165 065) (116 336)
activities
Net cash outflow from investing (144 985) (69 336)
activities
Net cash outflow from financing (147 868) (14 645)
activities
Net decrease in cash and cash (190 492) (1 892)
equivalents
At beginning of the year 228 542 230 434
Cash and cash equivalents at end 38 050 228 542
of year
ABRIDGED CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
31 December 2006 31 December 2005
R`000 R`000
Actuarial gains and losses (529) (371)
recognised directly in equity
Gross (745) (523)
Deferred tax 216 152
Net expense recognised directly (529) (371)
in equity
Profit for the year 226 543 171 455
Total recognised income for the 226 014 171 084
year
Attributable to:
Equity holders of the company 202 553 158 428
Minority interest 23 461 12 656
226 014 171 084
ABRIDGED GROUP BALANCE SHEETS
31 December 2006 31 December 2005
R`000 R`000
ASSETS
Non-current assets 696 931 576 137
Property, plant and equipment 614 087 502 118
Intangible assets 14 647 11 676
Investment in associates 19 548 18 249
Defined benefit asset 1 640
Deferred taxation 10 759 9 094
Other non-current assets 36 250 35 000
Current assets 836 316 792 889
Inventory 423 007 309 486
Accounts receivable 345 499 248 428
Cash 67 810 139 011
Financial assets at fair value 95 964
Total assets 1 533 247 1 369 026
EQUITY AND LIABILITIES
Capital and reserves 998 307 943 259
Share capital and premium 40 555 36 414
Share-based payment reserve 2 551 1 831
Treasury shares (101 508) (459)
Non-distributable reserves 16 755 12 389
Retained earnings 1 039 954 893 084
Ordinary shareholders equity 998 307 943 259
Minority interest 79 055 43 651
Total equity 1 077 362 986 910
Non-current liabilities 89 077 126 138
Interest bearing borrowings 5 069 53 252
Post-employment medical 15 228 14 681
benefits
Deferred taxation 68 780 58 205
Current liabilities 366 808 255 978
Trade and other payables 299 335 210 875
Borrowings 13 052 15 829
Taxation 9 092 9 687
Provisions for liabilities and 15 569 13 154
charges
Bank overdrafts 29 760 6 433
Total liabilities 455 885 382 116
Total equity and liabilities 1 533 247 1 369 026
Net asset value per share 17 761 16 462
(cents)
Capital expenditure 166 275 111 788
Capital commitments
- contracted 54 918 60 537
- authorised but not contracted 30 565 39 728
NOTES TO THE CONSOLIDATED ABRIDGED FINANCIAL STATEMENTS
Accounting policies
These consolidated abridged audited financial statements have been prepared in
accordance with IAS34, Interim Financial Reporting. The consolidated abridged
audited financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), the IFRIC interpretations adopted by the
International Accounting Standards Board ("IASB") and the requirements of the
South African Companies Act. These financial statements have been prepared on
the historical cost basis, except for revaluation of financial instruments.
IAS19 (amended) Employee Benefits is mandatory for the group`s accounting period
beginning on or after 1 January 2006. It introduces the option of an alternative
recognition approach for actuarial gains and losses. The group elected to adopt
this approach, resulting in the recognition of actuarial gains and losses on
defined benefit plans directly in equity. The group therefore also adopted the
statement of recognised income and expense as required by IAS19 to replace the
statement of changes in equity. It also adds new disclosure requirements.
Contingencies
The bank and other guarantees given by the group to third parties amounted to
R9,6 million as at 31 December 2006 (R43,1 million as at 31 December 2005).
Borrowings 31 December 2006 31 December 2005
R`000 R`000
Current 13 052 15 829
Non-current 5 069 53 252
18 121 69 081
The movement in the borrowings can
be analysed as follows:
Year ended December 2006
Opening amount (69 081)
Repayments 51 112
Amounts raised (152)
Closing amount (18 121)
Fair value adjustments on 31 December 2006 31 December 2005
financial instruments R`000 R`000
Forward foreign exchange contracts 668 (190)
- fair value hedges
Total 668 (190)
Annual General Meeting
The annual report will be mailed to shareholders by 31 March 2007 along with the
notice of annual general meeting. The annual general meeting will be held on 4
May 2007 at 14h00 at Metair Investments Limited, 10 Anerley Road, Parktown.
Auditors` report
The abridged results of the group as set out above have been audited by the
group`s auditors, PricewaterhouseCoopers. Their report is available for
inspection at the company`s registered office (address details as above).
Signed on behalf of the board
A D PLUMMER - Chairman C T LOOCK - Managing Director
JOHANNESBURG, 14 March 2007
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
JOHANNESBURG
2001
REGISTERED OFFICE
10 Anerley Road
PARKTOWN
2193
SPONSOR
Arcay Moela Sponsors (Pty) Limited
4th Floor
South Office Tower
Hyde Park Corner
Hyde Park
2001
EXECUTIVE DIRECTORS: C T Loock (Managing); C I J van der Merwe (Finance)
NON-EXECUTIVE DIRECTORS: A D Plummer (Chairman)*; Mrs E le R Bradley; A Joffe;
GMC Ryan; G J Strydom
INDEPENDENT NON-EXECUTIVE DIRECTORS: R S Broadley; L Soanes*
COMPANY SECRETARY: S M Vermaak
*British
Date: 15/03/2007 06:59:55 Produced by the JSE SENS Department.
