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MTA - Metair Investments Limited - Abridged audited results for the year ended
31 December 2011
METAIR INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("Metair" or "the group")
(Reg No. 1948/031013/06)
Share code: MTA
ISIN code: ZAE 000090692
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011
HEPS increased 38% to 260cps
NORMALISED ROE improved to 27,0%
EBITDA improved by 38% to R693 million
ABRIDGED GROUP INCOME STATEMENTS
31 December 31 December
2011 2010
R`000 R`000
Revenue 4 294 152 3 753 236
Cost of sales (3 376 719) (2 958 998)
Gross profit 917 433 794 238
Other operating income 166 236 48 972
Impairment (charges)/reversals (7 900) 19 687
Distribution, administrative and other expenses (499 546) (459 948)
Operating profit 576 223 402 949
Interest income 14 296 18 913
Interest expense (7 858) (14 075)
Share of results of associates 19 339 16 759
Profit before tax 602 000 424 546
Taxation (150 906) (121 009)
Profit for the year 451 094 303 537
Attributable to:
Equity holders of the company 408 365 277 682
Non-controlling interests 42 729 25 855
451 094 303 537
Depreciation and amortisation (89 150) (101 257)
Basic earnings per share (cents) 289 198
Headline earnings per share (cents) 260 189
Number of shares in issue (`000) 152 532 152 532
Number of shares in issue excluding
treasury shares (`000) 141 451 141 058
Weighted average number of shares in
issue (`000) 141 217 140 363
Calculation of headline earnings
per share (R`000)
Net profit attributable to ordinary
shareholders 408 365 277 682
Profit on insurance recovery and impairment
charges/(reversals) (41 492) (19 687)
Tax effect of insurance recovery and
impairment (charges)/reversals 4 813 4 562
Impairment (charges)/reversals attributable
to non-controlling shareholders (202) 2 945
(Profit)/loss on disposal of property, plant
and equipment after tax (3 671) 101
Headline earnings 367 813 265 603
Diluted earnings per share
Basic earnings per share (cents) 283 195
Headline earnings per share (cents) 255 187
Weighted average number of shares in
issue (`000) 141 217 140 363
Adjustment for dilutive share options (`000) 2 959 1 990
Number of shares used for diluted earnings
calculation (`000) 144 176 142 353
ABRIDGED GROUP STATEMENTS OF COMPREHENSIVE INCOME
31 December 31 December
2011 2010
R`000 R`000
Profit for the year 451 094 303 537
Other comprehensive income:
Actuarial losses recognised (5 345) (15 626)
Cash flow hedges (4 821)
Tax on other comprehensive income 2 645 3 990
Net other comprehensive income (7 521) (11 636)
Total comprehensive income for the year 443 573 291 901
Attributable to:
Equity holders of the company 401 033 266 880
Non-controlling interests 42 540 25 021
443 573 291 901
ABRIDGED GROUP BALANCE SHEETS
31 December 31 December
2011 2010
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 762 752 699 190
Intangible assets 22 718 26 367
Investment in associates 44 582 34 236
Defined benefit asset 6 504
Deferred taxation 11 266
841 318 766 297
Current assets
Inventory 693 646 606 547
Trade and other receivables 518 527 397 326
Derivative financial assets 615 23
Taxation 6 342 12 431
Cash and cash equivalents 421 678 305 572
1 640 808 1 321 899
Total assets 2 482 126 2 088 196
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 42 876 42 876
Treasury shares (113 509) (116 084)
Share-based payment reserve 17 542 2 813
Hedging reserve (3 471)
Non-distributable reserves 39 494 29 148
Retained earnings 1 599 664 1 297 256
Ordinary shareholders` equity 1 582 596 1 256 009
Non-controlling interests 118 812 113 910
Total equity 1 701 408 1 369 919
Non-current liabilities
Borrowings 27 458 31 912
Post-employment medical benefits 25 074 21 329
Deferred taxation 64 118 52 959
116 650 106 200
Current liabilities
Trade and other payables 533 374 502 639
Borrowings 24 627 22 424
Taxation 7 541 3 476
Provisions for liabilities and charges 60 651 53 183
Derivative financial liabilities 12 769 14 607
Bank overdrafts 25 106 15 748
664 068 612 077
Total liabilities 780 718 718 277
Total equity and liabilities 2 482 126 2 088 196
Net asset value per share (cents) attributable
to ordinary shareholders 1 119 890
Capital expenditure 162 146 124 153
Capital commitments
- contracted 24 913 58 513
- authorised but not contracted 182 573 108 812
ABRIDGED GROUP STATEMENTS OF CASH FLOWS
31 December 31 December
2011 2010
R`000 R`000
Operating activities
Profit before tax 602 000 424 546
Non-cash items 26 405 56 990
Working capital changes (178 005) 3 085
Cash generated from operations 450 400 484 621
Finance charges (7 858) (14 075)
Taxation paid (126 833) (112 123)
Dividends paid (130 102) (113 769)
Dividend income from associate 8 993 3 920
Net cash inflow from operating activities 194 600 248 574
Investing activities
Investment income 14 296 18 913
Net cash used in other investing activities (102 472) (121 232)
Net cash outflow from investing activities (88 176) (102 319)
Net cash inflow/(outflow) from financing activities 324 (88 974)
Net increase in cash and cash equivalents 106 748 57 281
Cash and cash equivalents at beginning of the year 289 824 232 543
Cash and cash equivalents at end of the year 396 572 289 824
ABRIDGED GROUP STATEMENTS OF CHANGES IN EQUITY
Share-
Share based
capital & Treasury payment Hedging
premium shares reserve reserve
R`000 R`000 R`000 R`000
Balance as at 1 January 2010 42 876 (124 289) 3 389
Net profit for the year
Other comprehensive income:
Actuarial losses
Total comprehensive income
for the year
Employee share option scheme:
- Value of service provided 3 098
- Loss on settlement (3 674)
Net movement in treasury shares 8 205
Transfer of associate profit
and dividend
Dividends **
Balance as at 31 December 2010 42 876 (116 084) 2 813
Net profit for the year
Other comprehensive income (3 471)
Total comprehensive income
for the year (3 471)
Employee share option scheme:
- Value of service provided 4 415
- Loss on settlement (1 067)
- Deferred taxation 11 381
Net movement in treasury shares 2 575
Transfer of associate profit
and dividend
Dividends *
Balance as at 31 December 2011 42 876 (113 509) 17 542 (3 471)
ABRIDGED GROUP STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
Attri-
butable
Non- to equity Non-
distri- holders control
butable Retained of the ling Total
reserve earnings company interests equity
Balance as at
1 January 2010 16 309 1 148 964 1 087 249 96 772 1 184 021
Net profit for
the year 277 682 277 682 25 855 303 537
Other comprehensive
income:
Actuarial losses (10 802) (10 802) (834) (11 636)
Total comprehensive
income for the year 266 880 266 880 25 021 291 901
Employee share
option scheme:
Value of
service
provided 3 098 137 3 235
- Loss on settlement (3 674) (3 674)
Net movement in
treasury shares 8 205 8 205
Transfer of
associate
profit and
dividend 12 839 (12 839)
Dividends ** (105 749) (105 749) (8 020) (113 769)
Balance as at
31 December 2010 29 148 1 297 256 1 256 009 113 910 1 369 919
Net profit for
the year 408 365 408 365 42 729 451 094
Other comprehensive
income (3 861) (7 332) (189) (7 521)
Total comprehensive
income for the year 404 504 401 033 42 540 443 573
Employee share
option scheme:
Value of
service
provided 4 415 714 5 129
- Loss on settlement (1 067) (1 067)
- Deferred taxation 11 381 11 381
Net movement in
treasury shares 2 575 2 575
Transfer of
associate profit
and dividend 10 346 (10 346)
Dividends * (91 750) (91 750) (38 352) (130 102)
Balance as at
31 December 2011 39 494 1 599 664 1 582 596 118 812 1 701 408
*An ordinary dividend of 65 cents per share was declared in respect of the year
ended 31 December 2010.
**
An ordinary dividend of 15 cents per share was declared in respect of the year
ended 31 December 2009 as well as a special dividend of 60 cents per share in
respect of the six months ended 30 June 2010.
ABRIDGED SEGMENTAL REVIEW
Revenue
31 December 31 December
2011 2010
R`000 R`000
Local
Original equipment 2 697 984 2 273 233
After market 893 159 895 384
Non-auto 441 385 353 710
4 032 528 3 522 327
Direct exports
Original equipment 86 201 84 560
After market 139 060 111 223
Non-auto 36 363 35 126
261 624 230 909
Property rental 60 873 58 650
Reconciling items * (60 873) (58 650)
Total 4 294 152 3 753 236
Net interest income
Profit before tax
ABRIDGED SEGMENTAL REVIEW (CONTINUED)
Profit/(loss) before interest and tax
31 December 31 December
2011 2010
R`000 R`000
Local
Original equipment 276 631 150 418
After market 194 157 159 903
Non-auto 58 956 35 972
529 744 346 293
Direct exports
Original equipment (7 941) 873
After market 20 698 8 770
Non-auto 2 782 (8 012)
15 539 1 631
Property rental 59 980 57 774
Reconciling items * (9 701) 14 010
Total 595 562 419 708
Net interest income 6 438 4 838
Profit before tax 602 000 424 546
*The reconciling items relate to Metair head-office companies and property
rental.
NOTES TO THE CONSOLIDATED ABRIDGED FINANCIAL STATEMENTS
Accounting policies
These condensed abridged financial statements have been prepared in accordance
with the recognition and measurement criteria of all applicable statements and
interpretations of International Financial Reporting Standards ("IFRS") in issue
and effective for the group at 31 December 2011 and is presented in terms of the
disclosure requirements set out in IAS34 - Interim Financial Reporting and AC
500 standards as issued by the Accounting Practices Board or its successor and
comply with the Listings Requirements of the JSE Limited. The accounting
policies applied to the condensed abridged financial statements are consistent
with those used in the annual financial statements for the year ended 31
December 2010. These financial statements do not include all the information
required for full annual financial statements and should be read in conjunction
with the consolidated financial statements as at and for the year ended 31
December 2011.
FNB fire and related insurance proceeds
Included in other operating income and operating expenses are insurance proceeds
and related costs in respect of the First National Battery (FNB) fire.
On 5 May 2011 a fire destroyed the battery formation (charging) facility at
FNB`s Benoni plant. The carrying value of property, plant and equipment was
impaired. Related operational losses have been recognised in profit/(loss) and
includes inventory damaged by the fire (and written off) and incidental business
interruption expenses. A portion of the insurance claim relating to the
replacement of property, plant and equipment, inventory and business
interruption has been agreed with the insurers and a total profit of R90 million
recognised. FNB expects all insurance claims to be finalised during the first
half of 2012.
R`000
The total profit recognised for the year is allocated as follows:
Profit on insurance recovery on property, plant and equipment 42 607
Insurance recovery on stock written off and business
interruption expenses 47 442
Total profit for the year 90 049
Made up of:
Total insurance proceeds recognised for the year 122 637
Less: Impairment of property, plant and equipment (6 785)
Stock written off and business interruption expenses (25 803)
Total profit for the year 90 049
Contingencies
The bank and other guarantees given by the Group to third parties amounted to
R3,7 million as at 31 December 2011 (R6,1 million as at 31 December 2010).
Borrowings
During the year the group repaid borrowings of R14,2 million (2010: R97,2
million) and raised long-term loans of R9,8 million and short-term loans of R2,2
million.
31 December 2011 31 December 2010
Assets Liabilities Assets Liabilities
Fair value adjustments
on financial instruments
Forward exchange
contracts - fair
value hedges 615 12 769 23 14 607
Total 615 12 769 23 14 607
AUDITORS` REPORT
The abridged results of the group as set out above have been audited by the
group`s auditors PricewaterhouseCoopers Inc. Their unqualified report is
available for inspection at the company`s registered office (address details
above).
ANNUAL GENERAL MEETING
The annual report will be mailed to shareholders by 28 March 2012 along with the
notice of annual general meeting. The annual general meeting will be held on 2
May 2012 at 14h00 at Metair Investments Limited, 10 Anerley Road Parktown,
Johannesburg.
Declaration of Ordinary Dividend No 61
The board is currently considering the declaration of a dividend and a further
announcement will be made in this regard.
OPERATING RESULTS
Metair has produced an excellent set of financial results for the year ended 31
December 2011. Headline earnings per share increased by 38% to 260cps (2010:
189cps) and the group achieved a normalised return on equity (excluding
impairments and First National Battery (FNB) fire) of 27,0% (2010: 22,6%). Cash
generation was excellent and earnings before interest, tax, depreciation and
amortisation was R692,6 million (2010: R501,3 million).
Metair started trading more than 30 years ago as a supplier of products to
Toyota SA which was until recently a sister company. As a result, the majority
of Metair`s business was in the original equipment (OE) manufacturing space and
reliant on a few customers. In order to improve the sustainability of our
business we have followed a deliberate strategy of bringing more balance to the
group, its client base and product lines. We are now represented with all seven
original equipment manufacturers(OEMs) producing in South Africa and have
significantly expanded the OE product lines we supply. While the OE business
remains core to the group`s strategy, we are focused on growing the aftermarket
and non-automotive areas of the business to diversify our earnings base.
GROUP OPERATING PERFORMANCE
Revenue increased by 14% from R3 753 million to R4 294 million, primarily as a
result of the increase in vehicle production figures and local non-auto sales
growth. Gross profit margin improved from 21,2% to 21,4% due to volume increases
across OEMs, cost control and the continued good performances for aftermarket
and non-auto segments.
Other operating income increased from R48,9 million to R166,2 million mainly due
to insurance proceeds relating to the fire at our FNB division of R122,6
million.
The financial effects of the fire that occurred at our FNB battery division`s
Benoni plant in the month of May 2011 is explained in the notes above.
Distribution costs increased from R123,3 million to R132,8 million principally
as a consequence of increased volumes in the aftermarket segment.
Administrative cost increases largely resulted from inflationary impacts coupled
with increases in various expenses relating to volume increases as well as
certain once off costs such as due diligence costs.
Operating profit increased from R402,9 million to R576,2 million. Included in
the operating profit is a charge of R1,1 million relating to the write-off of a
technical fee compared to impairment reversals of R19,7 million in 2010.
Excluding the impact of impairment reversals and the profit on the insurance
recovery relating to property, plant and equipment, operating profit was R534,7
million in 2011 compared to R383,3 million in 2010, an increase of 40%.
The effective tax rate was 25% (2010: 28%). The difference between the statutory
and effective rate is predominantly as a result of the effect of the fire at FNB
and assessed losses in certain subsidiaries.
Headline earnings increased by 38% to R367,8 million. Headline earnings are
arrived at after adjusting for impairment charges (reversals) and profits (or
losses) on the disposal of property, plant and equipment including the insurance
recovery.
Working capital was well controlled during the year. Net working capital as a
percentage of sales increased from 13,4% in 2010 to 15,8% in primarily as a
result of an accrual of R92 million for the insurance proceeds relating to the
fire at FNB being reflected in Receivables in 2011.
Cash balances in the group net of overdrafts and debt was a healthy R344,5
million (2010: R235,5 million).
REVIEW OF OPERATIONS
Original equipment (OE)
Local vehicle production grew by 12% to 505 094 in 2011 while exports grew to
271 654. The National Association of Automobile Manufacturers is forecasting
sales for 2012 of 588 500 vehicles, an increase of 8%.
The government`s Automotive Production and Development Programme (APDP) phases
in as the old Motor Industry Development Programme (MIDP) phases out by 2013.
The APDP provides certainty for the OE industry until at least 2020 and the
industry is optimistic about the potential for future growth and South Africa as
a manufacturing destination. The continued high levels of imports, an unintended
consequence of the MIDP, remain a challenge for the OE industry although it
offers opportunity in the aftermarket sector. Total vehicle sales for 2011 grew
16% for the year to 545 593 (2010: 470 934) of which 57% were imports.
The launch of the new product offering from Ford mentioned in last year`s report
was delayed due to floods in Thailand and will now launch in the first half of
2012.
The local OE business did well during the year with turnover rising to R2 698
million (2010: R2 273 million), an increase of 19%. This part of the business
benefits from the long product lifecycles which makes volumes and revenues
generally predictable under normal circumstances. 2008 and 2009 were, of course,
exceptional times in all industries, but especially in the automotive industry
when world production volumes came under extreme pressure.
Aftermarket
The aftermarket business manufactures and distributes automotive parts used to
service vehicles through their lifecycle. Batteries and brake pads make up the
bulk of this business which also includes shock absorbers, lights, radiators and
air conditioners.
There are approximately 8.6 million registered vehicles on South African roads
and we estimate that there are around one million more unregistered vehicles on
farms and game farms. The total vehicle population has been growing between two
and four percent for the last four years. This growing pool of vehicles needs
servicing and aftermarket products. New vehicle sales start to impact on the
aftermarket business after a lag of between two and four years. The high vehicle
sales in 2007 and 2008 should therefore continue to support growth. Turnover was
flat at R893 million (2010: R895 million), notwithstanding the loss of business
as a consequence of the fire at FNB. Margins declined slightly to 17% (2010:
18%) excluding the effect of insurance profits related to property, plant and
equipment. While the local aftermarket segment comprised approximately 21% of
group revenue, operating profit was 33% of group`s total, due to the higher
relative operating margins.
Non-Automotive
Our non-automotive business sells products mostly related to the
telecommunications, utility, mining, retail and materials/products handling
sectors. Local non-automotive revenue recovered well in 2011, rising 25% to R441
million and profit increased 64% to R59 million from R36 million in 2010 on
higher sales volumes and a recovery in margins due to increased volumes and
improved pricing.
Exports
Exports consist mainly of aftermarket and OE product exported to Europe. Exports
remained under pressure due to the strength of the rand during the period, but
recovered in the last quarter of the year as the rand weakened. Turnover rose
13% to R262 million and profit recovered to R16 million from 2010`s R1,6
million.
Property
Metair`s manufacturing operations are located in strategic areas and
consequently most locations are owned by our subsidiaries. This has resulted in
the group building a significant property portfolio. Profit in the property
division is mainly attributable to market related rental cost in the
subsidiaries on the properties used. Rental allocation rose 4% to R61 million in
2011.
New products
Start/Stop battery
The culmination by FNB of more than 20 years of continuous product enhancement
and development and a specific technology decision 6 years ago saw the
successful launch of our Start/Stop battery product range in 2011. Development
and testing work based on the latest German Automotive Society (VDA) engineering
specification for Start/Stop batteries has been ongoing for the last three years
with two leading German OEMs approving the product. This resulted in FNB being
awarded its first series production order for Start/Stop batteries in February
2012. A planned `worldwide series production release` approval will enable FNB
to sell its Start/Stop batteries in the global OE and aftermarkets. The group
believes that world carbon footprint reduction decisions will result in a
significant shift in the requirements for Start/Stop batteries from 2015/2016
and we are ideally positioned to participate in this paradigm shift.
Other products
Progress in the expansion of our other product lines continues. We will be
launching a new vehicle tracking unit in 2012 for aftermarket and OEM use. The
unit has been developed in partnership with a leading South African electronics
company and uses market-leading technology developed in our plastics division.
We are constantly looking for ways we can make use of the expertise and
technology gained in our automotive manufacturing units to create new and
innovative products, especially in those areas that can benefit from green
technology. Our Envirolight energy efficient streetlights are now being rolled
out in a number of municipalities in South Africa and we are investigating the
viability of producing a heat pump using the technology developed in our heat
exchanger division.
Prospects
The South African automotive market is inextricably linked to global
developments and while we see the OE market as being flat for 2012, we expect
some growth from the aftermarket sector on the back of strong sales of new
vehicles in the years preceding the global financial crisis. Despite the many
challenges facing the industry, we believe that the Group should sustain its
performance in 2012. Volume and exchange rate fluctuations continue to influence
the group`s performance.
Our focus for the coming year is on executing our strategy effectively
developing markets for the new Start/Stop batteries.
We thank all of our stakeholders for their commitment and support over the 2011
financial year and look forward to their continued support in 2012.
REGISTRARS
Computershare Investor Services (Pty) Limited
70 Marshall Street
JOHANNESBURG 2001
SPONSOR:
One Capital
INVESTOR RELATIONS
College Hill
Signed on behalf of the Board
O M E Pooe - Chairman
C T Loock - Managing Director
JOHANNESBURG
3 March 2012
The interim report was produced by Mr BM Jacobs (Finance Director) B Comm, B
Acc, CA (SA).
EXECUTIVE DIRECTORS: CT Loock (Managing); BM Jacobs (Finance)
NON-EXECUTIVE DIRECTORS: OME Pooe (Chairman); A Joffe; B Molotlegi
INDEPENDENT NON-EXECUTIVE DIRECTORS: RS Broadley; L Soanes*; A Galiel; JG Best
COMPANY SECRETARY: SM Vermaak
*British
6 March 2012
Date: 06/03/2012 10:38:58 Supplied by www.sharenet.co.za
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