Wrap Text
Summarised Audited Consolidated Results For The Year Ended 31 December 2013 And Dividend Announcement
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
SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013 AND DIVIDEND ANNOUNCEMENT
Revenue increased
13.6% to
R5.2 billion
Headline earnings
per share of
219 cents
impacted by labour
disruptions and
transactions costs
Excellent progress
on delivery of the
group's
“3 x 50%"
strategy
Rombat integration
completed and new
Start/Stop
battery
facility
commissioned
2014
B-BBEE target
achieved
a year early – all
South African
subsidiaries at
Level 4 or better
Carbon footprint
of South African
subsidiaries
decreased
15.9%
Production-adjusted
energy
consumption
limited to a
1.8% increase
across the group
Mutlu Aku acquisition represents the next
step in the group's international expansion
and establishes the group as the third largest
battery manufacturer in the EMEA region
CONDENSED CONSOLIDATED INCOME STATEMENT
31 December
31 December 2012
2013 Restated
R'000 R'000
Revenue 5 227 426 4 603 150
Cost of sales (4 177 984) (3 542 121)
Gross profit 1 049 442 1 061 029
Other operating income 98 087 67 342
Distribution, administrative and other operating expenses (701 915) (558 562)
Operating profit 445 614 569 809
Interest income 15 421 19 206
Interest expense (27 888) (26 457)
Share of results of associates 61 924 78 921
Profit before taxation 495 071 641 479
Taxation (121 172) (166 903)
Profit for the period 373 899 474 576
Attributable to:
Equity holders of the company 341 376 440 543
Non-controlling interests 32 523 34 033
373 899 474 576
Depreciation and amortisation included in the above expenses (143 261) (112 599)
Operating lease rentals included in the above expenses (32 151) (33 270)
Earnings per share
Basic earnings per share (cents) 229 310
Headline earnings per share (cents) 219 310
Diluted earnings per share
Diluted earnings per share (cents) 223 304
Diluted headline earnings per share (cents) 214 304
Number of shares in issue (‘000) 198 986 152 532
Number of shares in issue excluding treasury shares (‘000) 194 566 145 461
Weighted average number of shares in issue (‘000) 149 271 142 030
Adjustment for dilutive shares (‘000) 3 585 2 933
Number of shares used for diluted earnings calculation (‘000) 152 856 144 963
Calculation of headline earnings (R'000)
Net profit attributable to ordinary shareholders 341 376 440 543
(Profit)/loss on insurance recovery and impairment charges (15 342) 147
Taxation effect of insurance recovery and impairment charges 1 243 110
Profit on disposal of property, plant and equipment – net of tax (34) (132)
Headline earnings 327 243 440 668
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December
31 December 2012
2013 Restated
R'000 R'000
Profit for the period 373 899 474 576
Other comprehensive income:
– Actuarial gains/(losses) recognised 395 (1 321)
– Exchange gains arising on translation of foreign operations 51 881 36 845
– Cash flow hedges 110 377 (7 548)
– Taxation on other comprehensive income (157) (1 054)
Net other comprehensive income 162 496 26 922
Total comprehensive income for the period net of taxation 536 395 501 498
Attributable to:
Equity holders of the company 503 182 467 280
Non-controlling interests 33 213 34 218
536 395 501 498
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
31 December
31 December 2012
2013 Restated
R'000 R'000
Balance at beginning of the period 2 052 730 1 661 874
Net profit for the period 373 899 474 576
Other comprehensive income for the period 162 496 26 922
Total comprehensive income for the period 536 395 501 498
Non-controlling interest arising on acquisition of subsidiary 2 055
Proceeds from shares issued 1 500 000
Share issue costs (44 945)
Employee share plan:
– Value of service provided 9 747 8 574
– Deferred taxation 15 767 11 817
Vesting of share-based payment obligation:
– Estimated taxation effects of utilisation of treasury shares (15 123) (16 148)
– Loss on settlement of old scheme (586) (4 194)
Transfer of cashflow hedge to purchase consideration of subsidiary (110 377) 12 369
Shares disposed by the Metair Share Trust 1 095 6 988
Dividend * (155 951) (132 103)
Balance at end of the period 3 788 752 2 052 730
* An ordinary dividend of 70 cents per share (2012: 95 cents) was declared in respect of the year ended 31 December 2013
(31 December 2012).
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 1 January
31 December 2012 2012
2013 Restated Restated
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 2 844 929 1 191 499 706 811
Intangible assets 1 243 531 84 494 16 728
Investment in associates 199 786 175 939 159 398
Deferred taxation 10 838 10 503 11 266
4 299 084 1 462 435 894 203
Current assets
Inventory 1 264 241 755 274 579 792
Trade and other receivables 1 274 387 667 665 478 003
Derivative financial assets 15 870 162 615
Taxation 21 002 424 4 869
Cash and cash equivalents 574 742 407 909 371 845
3 150 242 1 831 434 1 435 124
Total assets 7 449 326 3 293 869 2 329 327
EQUITY AND LIABILITIES
Capital and reserves
Stated capital/share capital and premium 1 497 931 42 876 42 876
Treasury shares (45 241) (72 232) (113 509)
Share-based payment reserve 58 215 33 287 17 584
Hedging reserve (3 471)
Foreign currency translation reserve 87 809 36 660
Equity accounted earnings 190 742 171 895 154 309
Retained earnings 1 897 909 1 755 168 1 485 063
Ordinary shareholders' equity 3 687 365 1 967 654 1 582 852
Non-controlling interests 101 387 85 076 79 022
Total equity 3 788 752 2 052 730 1 661 874
Non-current liabilities
Borrowings 1 021 976 183 804 27 458
Post-employment benefits 107 685 28 499 24 860
Deferred taxation 378 954 60 590 58 510
Deferred grant income 125 313
Provision for liabilities and charges 21 080 16 372
1 655 008 289 265 110 828
Current liabilities
Trade and other payables 1 472 949 602 399 430 683
Borrowings 180 796 67 398 24 627
Taxation 41 682 11 601 7 541
Provisions for liabilities and charges 141 406 71 366 58 607
Derivative financial liabilities 1 492 7 629 10 061
Bank overdrafts 167 241 191 481 25 106
2 005 566 951 874 556 625
Total liabilities 3 660 574 1 241 139 667 453
Total equity and liabilities 7 449 326 3 293 869 2 329 327
Net asset value per share (cents) attributable to ordinary shareholders
calculated on number of shares in issue excluding treasury shares 1 895 1 353 1 119
Capital expenditure 135 027 286 163 143 040
Capital commitments:
– contracted 68 605 67 504 23 134
– authorised but not contracted 287 923 170 200 139 824
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
31 December 2012 2011
2013 Restated Restated
R'000 R'000 R'000
Operating activities
Profit before taxation 495 071 641 479 571 561
Non-cash items 211 434 67 586 (259 976)
Working capital changes (40 597) (36 620) 69 654
Cash generated from operations 665 908 672 445 381 239
Interest paid (27 888) (26 457) (7 500)
Taxation paid (88 814) (156 477) (109 260)
Dividends paid (155 951) (132 103) (126 028)
Dividend income from associates 43 077 61 335 21 152
Net cash inflow from operating activities 436 332 418 743 159 603
Investing activities
Interest received 15 421 19 206 12 647
Net cash used in other investing activities (2 318 046) (723 411) (84 236)
Net cash outflow from investing activities (2 302 625) (704 205) (71 589)
Net cash inflow from financing activities 2 099 626 152 334 324
Net increase/(decrease) in cash and cash equivalents 233 333 (133 128) 88 338
Cash and cash equivalents at beginning of the period 216 428 346 739 258 401
Exchange (losses)/gains on cash and cash equivalents (42 260) 2 817
Cash and cash equivalents at end of the period 407 501 216 428 346 739
CONDENSED SEGMENTAL REVIEW
Profit before interest and
Revenue taxation
31 December 31 December
31 December 2012 31 December 2012
2013 Restated 2013 Restated
R'000 R'000 R'000 R'000
Local
Original equipment 3 143 576 3 135 068 221 968 308 140
Aftermarket 1 440 130 1 162 136 224 263 202 724
Non-auto 486 399 462 957 18 162 59 141
5 070 105 4 760 161 464 393 570 005
Direct exports
Original equipment 105 307 94 844 (3 638) 10 415
Aftermarket 772 275 471 953 60 901 40 304
Non-auto 44 810 35 290 1 494 2 849
922 392 602 087 58 757 53 568
Property rental 90 671 67 053 90 026 66 124
Reconciling items: *
– Share of results of associates 61 924 78 921
– Managed associates (765 071) (759 098) (62 486) (96 243)
Other reconciling items ** (90 671) (67 053) (105 076) (23 645)
Total 5 227 426 4 603 150 507 538 648 730
Net interest expense (12 467) (7 251)
Profit before taxation 495 071 641 479
* Although the results of Hesto Harnesses Proprietary Limited do not qualify for consolidation due to the application of IFRS 10 and IAS 28, the results of
Hesto Harnesses Proprietary Limited have been included in the segmental review as Metair has a 75% equity interest and is responsible for the opera-
tional management of this associate.
** The reconciling items relate to Metair head office companies and property rental.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting policies
The summarised consolidated financial statements have been prepared in accordance with the requirements of the JSE Limited Listing Requirements for
abridged reports and the requirements of the Companies Act applicable to summary financial statements. The Listing Requirements require abridged
reports to be prepared in accordance with the framework concepts, the measurement and recognition requirements of International Financial Report
Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34, Interim financial reporting.
The accounting policies applied in the preparation of the consolidated financial statements, from which the condensed consolidated financial statements
were derived, are in terms of IFRS and are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial
statements, except as described below:
The adoption of IFRS 10 (consolidated financial statements) required Metair to re-assess control over its investees as at 1 January 2013. As a result of this
re-assessment, it was concluded that Hesto Harnesses Proprietary Limited, which was previously consolidated, should be accounted for as an associate. The
group has applied IFRS 10 and IAS 28 retrospectively in accordance with their transition provisions. The financial effects of accounting for Hesto Harnesses
Proprietary Limited as an associate at 1 January 2012 and 31 December 2012 are shown in the restated balances.
Supreme fire and related insurance proceeds
Included in other operating income are insurance proceeds of R30.9 million in respect of the fire at Supreme Springs (a division of Metindustrial (Supreme))
on 31 January 2013. The total profit recognised for the year amounted to R13.1 million after recognising expenses and related costs of R17.8 million.
Contingencies
At 31 December 2013, bank and other guarantees given by the group to third parties amounted to R3.7 million (2012: R3.7 million). The company provided
guarantees for funding provided by Absa Bank Limited to Metindustrial and Inalex and no material liabilities are likely to arise.
Borrowings
During the year the group repaid long-term loans of R58.2 million (2012: R69 million), raised long-term loans of R773.1 million (2012: R199.8 million),
repaid short-term loans of R56.2 million (2012: R110.1 million) and raised short-term loans of R0.1 million (2012: R144.9 million).
Fair value adjustment on financial instruments
31 December 2013 31 December 2012
R'000 Assets Liabilities Assets Liabilities
Forward exchange contracts - fair value hedges 15 870 1 492 162 7 629
Business combinations
On 5 December 2013, the group acquired 100% of the issued shares of Mutlu Holdings Anonim Sirketi (Mutlu group), which is a group of companies
incorporated under Turkish law. Mutlu Aku, a 75% held listed company in Turkey, is the group's main operating subsidiary and a manufacturer of ‘lead-acid
batteries' for the original manufacturers (OEM), aftermarket, non-automotive and export segments. Mutlu group was acquired to complement the group's
existing battery operations and to deliver strategic and financial benefits.
Total consideration transferred amounted to R2 890.7 million (including MTO liability raised). Goodwill of R543.7 million arising from the acquisition is at-
tributable to the anticipated profitability arising from the group's access to new geographic markets, increased supply and the anticipated future operating
synergies from the combination. The following table summarises the assets and liabilities obtained at the acquisition date:
Provisional
Fair value
Recognised amounts of identifiable assets acquired and liabilities assumed: R'000
Assets
Intangible assets – Brands and customer relationships 657 533
Property, plant and equipment 1 595 895
Inventory 430 200
Trade and other receivables 503 754
Cash and cash equivalents 84 784
3 272 166
Liabilities
Borrowings (297 005)
Provisions (127 289)
Trade and other payables (182 275)
Net deferred taxation (318 644)
(925 213)
Total identifiable net assets 2 346 953
Goodwill 543 697
Purchase consideration (including currency hedging) 2 890 650
Transaction-related costs included in administration expenses in the income statement amounted to R78.1 million for the year ended 31 December 2013.
The fair value of trade receivables is R503.8 million and includes trade receivables with a fair value of R481.7 million, of which R0.1 million is considered
doubtful. None of the goodwill recognised is expected to be deductible for income taxation purposes.
The fair value of the acquired identifiable tangible and intangible assets is provisional, pending final valuations for those assets.
In respect of this acquisition, the total consideration is based on US Dollars of 287 152 540, translated into Rands at an exchange rate of R10.48 to the
US Dollar (effective rate of R10.07 after hedging).
As from
At the date 1 January
of acquisition 2013
Impact of the acquisition on the results of the group R'000 R'000
From the dates of acquisition, the acquired businesses
contributed:
– Revenue 319 676 2 276 202
– Attributable profit 33 244 146 817
Auditors' report
This summarised report is extracted from audited information, but is not itself audited. The annual financial statements were audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon.
The audited annual financial statements and auditors' report thereon are available for inspection at the company's registered office.
The directors take full responsibility for the preparation of the abridged condensed report and the financial information has been correctly extracted from
the underlying annual financial statements. Any reference to future financial performance has not been reviewed or reported on.
Declaration of Ordinary Dividends No 63
Notice is hereby given that a gross cash dividend of 70 cents per share has
been declared by the board in respect of the year ended 31 December 2013.
The dividend has been declared out of income reserves.
The salient dates for the payment of the dividend are detailed below
Last day to trade Friday, 16 May 2014
Shares to commence trading ex dividend Monday, 19 May 2014
Record date Friday, 23 May 2014
Payment of dividend Monday, 26 May 2014
Shareholders will not be permitted to dematerialise or rematerialise their share
certificates between Monday, 19 May 2014 and Friday, 23 May 2014, both days
inclusive.
The following additional information is disclosed with regard to the
dividend:
– the local dividend tax rate is 15%;
– no STC credits were utilised;
– the gross local dividend amount is 70 cents per share for shareholders
exempt from dividends tax;
– the net local dividend amount is 59.50 cents per share for shareholders
liable to pay a dividend tax;
– Metair's issued share capital is 198 985 886 (which includes
4 419 421 treasury shares); and
– Metair's income tax reference number is 9300198711.
Annual general meeting
The annual report will be mailed to shareholders along with the notice of annual general meeting. The annual general meeting will be held on 5 May 2014
at 14:00 at Metair's registered office, 10 Anerley Road, Parktown, Johannesburg.
INTEGRATED REPORT
The group's sustainability reporting included in the annual report for 2013 and the results presentation will be available on the company's website
(www.metair.co.za).
OPERATING RESULTS
In the context of the extremely difficult labour environment, Metair produced a reasonable set of financial results for the year ended
31 December 2013. The 2013 year was a year of contrasts that can be characterised on the one hand by nine weeks of debilitating labour un-
rest and on the other, by the conclusion after a three-year process of the acquisition of Mutlu Aku, the largest battery manufacturer in Turkey.
Management's focus on the delivery of our strategy by executing the extremely complicated and challenging acquisition of Mutlu Aku should
have been supported by a strong local market performance. However, the disruptive labour environment negatively impacted our local OE
segment by R87 million (PBIT). In addition, the labour disruptions experienced in the mining sector resulted in the R41 million (PBIT) decline
in the non-automotive segment's profit before interest and tax. These factors, combined with the substantial once-off acquisition expense
of R78 million, reduced earnings to R374 million from the previous period's R475 million. Earnings per share declined to 229 cents compared
to 310 cents in 2012. Notwithstanding the decline in attributable earnings, cash generated from operations was R665 million compared to
R672 million in 2012.
The once-off Mutlu Aku acquisition expense of R78 million was partly offset by earnings of R29 million from the solid performance from
Mutlu Aku for the three weeks of December trade that have been included in Metair's results.
Acquisition of Mutlu Aku
The acquisition of Mutlu Aku was a transformative event that deepens Metair's international relevance. Mutlu Aku is Turkey's leading battery
manufacturer, Start/Stop ready, vertically integrated and has the largest share of both the Turkish OE and aftermarkets. Mutlu Aku has
production capacity of approximately 5.7 million batteries and has been the market leader in Turkey for more than 60 years. It also has an
extensive battery dealer network in Turkey through 82 dealerships and more than 6 100 sub-dealers.
The mandatory tender offer closed on 11 March 2014 and Metair now owns 96.4% of Mutlu Aku.
The total acquisition price was US Dollars 287.2 million which was hedged at an effective average exchange rate of R10.07 to the US Dollar.
The Mutlu group not only gives Metair access to additional production capacity, but also positions us closer to strategic markets in Europe,
Eastern Europe, the Middle East and North Africa. The Mutlu group transforms Metair by providing us with access to attractive growth
markets and enhances our geographical diversification As with the Rombat acquisition in 2012, this transaction brings further balance to
our business and allows us to leverage our technological expertise and strong balance sheet.
The integration of Mutlu Aku within the Metair group is proceeding according to plan. Mutlu Aku's management are highly motivated and
have welcomed Metair's inclusive management practices and disciplines. Our relationship with the previous controlling shareholders is
excellent and the handover is proceeding well within the expectations we set ourselves. We are grateful for all the support and guidance the
previous shareholders continue to provide, in particular Mr Attila Turker and Mr Ali Nuri Turker.
Review of operations
Rombat
Rombat had another pleasing year, despite declines in sales from most European Original Equipment Manufacturers. The company delivered
EBITDA of Lei 36 million (R106 million). Turnover rose to Lei 305 million (R900 million) compared to Lei 240 million (R576 million) for the nine-
and-a-half months of inclusion in 2012. Return on equity rose strongly, although this has been offset by an increased investment in marketing
spend. The Romanian government supported Rombat's new Start/Stop manufacturing facilities through a grant of €8 million which was received
in the latter part of 2013. The grant will be released though the income statement over the estimated useful life of the facility.
Original equipment
South Africa
The South African automotive industry was on track to report production of around 550 000 units in 2013 (2012: 510 000 units) on the back
of increased exports from BMW and Ford. However, production ended the year at 514 000 units as a direct result of the strike disruptions.
Due to the length of the strikes, it was not possible to catch up the lost production.
The outlook for the South African OE automotive sector in the short term is uncertain. On the one side, there is the fantastic support structure
of the APDP and the benefits of the devaluation of the rand. On the other, the country appears to face a power struggle in the labour
environment. It is unclear which side will prevail and should a balanced labour environment not be achieved there is a real risk that future OE
production will be shared between South Africa and other low-cost manufacturing destinations
Europe
Dacia was one of the beneficiaries of the trend towards more affordable vehicles in Europe and grew sales by 18% when most OEMs shrank
by more than 10% in 2013. Romania is one of the major production locations for Dacia and Rombat benefitted as a result.
Romanian vehicle production volumes increased slightly to 411 000 units.
Aftermarket
South Africa
Our aftermarket and non-automotive businesses remain a key focus for entrenching balance in our business. Aftermarket was seriously
affected by the flood of cheap imports across all categories. Our focus is to maintain quality and focus on the high-end brands through
our superior production processes. Some non-automotive product lines were negatively affected by continuing disruptions in the mining
industry and project delays in the construction industry.
Europe
In a difficult market, the group held market share in Romania and its other export destinations like France, Germany and Italy.
Transformation
We are extremely pleased with our continued progress in all aspects of transformation in the group. Five of our major South African
operations are at Level 3 on the Department of Trade and Industry Codes of Good Practice, and four are at Level 4. This exceeds our target of
achieving Level 4 at all South African operations by 2014.
Human capital
The industry strikes overshadowed 2013 and emphasised once again the importance of maintaining good relationships with workers. Our fo-
cus on improving the daily experience of our employees continued during 2013. We also standardised and refined our wellness plans across
the group. We completed upgrades of our canteens, clinics and ablution facilities. We again invested a substantial amount in skills develop-
ment initiatives and reported a significant improvement in our Lost Time Injury Frequency Rate to 1,26 incidents per 200 000 hours worked.
Outlook
During 2014 we will be focusing intently on maximising the benefits of our international acquisitions, ensuring rapid and effective integra-
tion and entrenching our relevance in the new markets we have access to.
Metair's performance in the year ahead is dependent upon, inter alia, the successful execution of our strategy, OE volumes, a peaceful labour
environment, efficiencies, internal inflation recoveries and the exchange rate. Subject to such factors we expect 2014's financial performance
to be satisfactory.
Board changes
With effect from 1 January 2014 Mr Brand Pretorius was appointed to the board as an independent non-executive director and Mr David
Wilson as non-executive director.
Thanks
We would like to thank the people who work for us for their diligence in overcoming 2013's difficult circumstances and ensuring direction of
the group. Our thanks also go to the support staff, advisors and funders who helped to make the Mutlu Aku acquisition possible.
Lastly, we thank all our stakeholders and particularly our customers for their continued support.
The summarised audited consolidated results were produced by Mr BM Jacobs (Finance Director) B Comm B Acc CA (SA).
Signed on behalf of the board in Johannesburg on 24 March 2014
O M E Pooe – Chairman
C T Loock – Managing Director
EXECUTIVE DIRECTORS: CT Loock (Managing); BM Jacobs (Finance)
NON-EXECUTIVE DIRECTORS: OME Pooe (Chairman); A Joffe; DR Wilson
INDEPENDENT NON-EXECUTIVE DIRECTORS: RS Broadley; L Soanes*; A Galiel; JG Best; SG Pretorius
*British
COMPANY SECRETARY: SM Vermaak
REGISTRARS
Computershare Investor
Services (Pty) Limited
70 Marshall Street
JOHANNESBURG 2001
SPONSOR
One Capital
INVESTOR RELATIONS
Instinctif Partners
Date: 25/03/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
