Wrap Text
Condensed audited results for the year ended 31 December 2014 and dividend announcement
METAIR INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("METAIR" OR "THE GROUP" OR "THE COMPANY")
(Reg No. 1948/031013/06)
Share code: MTA
ISIN code: ZAE 000090692
CONDENSED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
AND DIVIDEND ANNOUNCEMENT
Increased
Operating profit
86%
Increased
Cash generated from operations
R847 million
Revenue (million)
4 603 5 227 7 279
2012 2013 2014
HEPS (cents)
310 219 303
2012 2013 2014
EBITDA (million)
761 651 1 158
2012 2013 2014
CONDENSED CONSOLIDATED INCOME STATEMENT
31 December 31 December
2014 2013
R'000 R'000
Revenue 7 278 815 5 227 426
Cost of sales (5 695 917) (4 177 984)
Gross profit 1 582 898 1 049 442
Other operating income 162 755 98 087
Distribution, administrative and other operating expenses (916 272) (701 915)
Operating profit 829 381 445 614
Interest income 22 698 15 421
Interest expense (118 935) (27 888)
Share of results of associates 70 006 61 924
Profit before taxation 803 150 495 071
Taxation (170 845) (121 172)
Profit for the period 632 305 373 899
Attributable to:
Equity holders of the company 601 460 341 376
Non-controlling interests 30 845 32 523
632 305 373 899
Depreciation and amortisation included in the above expenses (258 825) (143 261)
Operating lease rentals included in the above expenses (33 628) (32 151)
Earnings per share
Basic earnings per share (cents) 308 229
Headline earnings per share (cents) 303 219
Diluted earnings per share
Diluted earnings per share (cents) 305 223
Diluted headline earnings per share (cents) 301 214
Number of shares in issue ('000) 198 986 198 986
Number of shares in issue excluding treasury shares ('000) 196 878 194 566
Weighted average number of shares in issue ('000) 195 434 149 271
Adjustment for dilutive shares ('000) 1 549 3 585
Number of shares used for diluted earnings calculation ('000) 196 983 152 856
Calculation of headline earnings per share (R'000)
Net profit attributable to ordinary shareholders 601 460 341 376
Profit on insurance recovery – fire (5 826) (15 342)
Taxation effect of insurance recovery 1 393 1 243
Profit on disposal of property, plant and equipment – net (4 473) (34)
Headline earnings 592 554 327 243
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 31 December
2014 2013
R'000 R'000
Profit for the period 632 305 373 899
Other comprehensive income:
– Actuarial gains recognised (13 197) 395
– Exchange gains arising on translation of foreign operations 12 338 51 881
– Cash fiow hedges 110 377
– Taxation on other comprehensive income 2 703 (157)
Net other comprehensive income 1 844 162 496
Total comprehensive income for the period net of taxation 634 149 536 395
Attributable to:
Equity holders of the company 603 502 503 182
Non-controlling interests 30 647 33 213
634 149 536 395
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
31 December 31 December
2014 2013
R'000 R'000
Balance at beginning of the period 3 788 752 2 052 730
Net profit for the period 632 305 373 899
Other comprehensive income for the period 1 844 162 496
Total comprehensive income for the period 634 149 536 395
Proceeds from shares issued 1 500 000
Share issue costs (44 945)
Employee share plan:
– Value of service provided 17 033 25 514
Vesting of share-based payment obligation:
– Estimated taxation effects of utilisation of treasury shares (12 441) (15 123)
– Loss on settlement of old scheme (1 264) (586)
Transfer of cash flow hedge to purchase consideration of subsidiary (110 377)
Shares disposed by the Metair Share Trust 2 582 1 095
Dividend * (169 323) (155 951)
Acquisition of non-controlling interests (20 857)
Balance at end of the period 4 238 631 3 788 752
* An ordinary dividend of 70 cents per share was declared in respect of the year ended 31 December 2013
An ordinary dividend of 95 cents per share was declared in respect of the year ended 31 December 2012
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 31 December
2014 2013
R'000 R'000
*Restated
ASSETS
Non-current assets
Property, plant and equipment 2 855 286 2 844 929
Intangible assets 1 269 895 1 267 510
Investment in associates 251 684 199 786
Deferred taxation 16 804 10 838
4 393 669 4 323 063
Current assets
Inventory 1 508 012 1 264 241
Trade and other receivables 1 401 928 1 274 387
Derivative financial assets 4 365 15 870
Taxation 24 011 21 002
Cash and cash equivalents 602 666 574 742
3 540 982 3 150 242
Total assets 7 934 651 7 473 305
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 497 931 1 497 931
Treasury shares (21 475) (45 241)
Share-based payment reserve 73 984 58 215
Foreign currency translation reserve 100 229 87 809
Equity accounted earnings 242 640 190 742
Changes in ownership reserve (20 857)
Retained earnings 2 266 646 1 897 909
Ordinary shareholders' equity 4 139 098 3 687 365
Non-controlling interests 99 533 101 387
Total equity 4 238 631 3 788 752
Non-current liabilities
Borrowings 1 670 577 1 021 976
Post-employment benefits 110 031 107 685
Deferred taxation 374 551 372 959
Deferred grant income 107 581 125 313
Provisions for liabilities and charges 60 290 21 080
2 323 030 1 649 013
Current liabilities
Trade and other payables 1 026 814 1 472 949
Borrowings 69 268 180 796
Taxation 24 636 41 682
Provisions for liabilities and charges 116 691 171 380
Derivative financial liabilities 5 388 1 492
Bank overdrafts 130 193 167 241
1 372 990 2 035 540
Total liabilities 3 696 020 3 684 553
Total equity and liabilities 7 934 651 7 473 305
Net asset value per share (cents) attributable to ordinary shareholders calculated on 2 102 1 895
number of shares in issue excluding treasury shares
Capital expenditure 266 567 135 027
Capital commitments:
– contracted 54 687 68 605
– authorised but not contracted 407 042 287 923
* Restated for finalisation of Mutlu acquisition
The finalisation of the fair values has resulted in an increase of R25 million to provisional goodwill
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2014 2013
R'000 R'000
*Restated
Operating activities
Profit before taxation 803 150 495 071
Non-cash items 292 494 133 376
Working capital changes (248 688) (40 597)
Cash generated from operations 846 956 587 850
Interest paid (89 326) (27 888)
Taxation paid (196 110) (88 814)
Dividends paid (169 323) (155 951)
Dividend income from associates 18 108 43 077
Net cash inflow from operating activities 410 305 358 274
Investing activities
Interest received 22 698 15 421
Net cash utilised in other investing activities (842 767) (2 239 988)
Net cash outflow from investing activities (820 069) (2 224 567)
Net cash inflow from financing activities 471 807 2 099 626
Net increase in cash and cash equivalents 62 043 233 333
Cash and cash equivalents at beginning of the period 407 501 216 428
Exchange gains/(losses) on cash and cash equivalents 2 929 (42 260)
Cash and cash equivalents at end of the period 472 473 407 501
* Restated for reclassification of Mutlu transaction costs
CONDENSED SEGMENTAL REVIEW
Revenue Profit before interest and taxation
31 December 31 December 31 December 31 December
2014 2013 2014 2013
R'000 R'000 R'000 R'000
Local
Original equipment 3 636 947 3 143 576 232 952 221 968
Aftermarket 2 346 055 1 440 130 420 922 224 263
Non-auto 601 212 486 399 44 207 18 162
6 584 214 5 070 105 698 081 464 393
Direct exports
Original equipment 108 973 105 307 6 590 (3 638)
Aftermarket 1 336 002 772 275 139 000 60 901
Non-auto 69 413 44 810 7 966 1 494
1 514 388 922 392 153 556 58 757
Property rental 95 365 90 671 93 490 90 026
Reconciling items:*
– Share of results of associates 70 006 61 924
– Managed associates (819 787) (765 071) (73 147) (62 486)
Other reconciling items** (95 365) (90 671) (42 599) (105 076)
Total 7 278 815 5 227 426 899 387 507 538
Net interest expense (96 237) (12 467)
Profit before taxation 803 150 495 071
* Although the results of Hesto Harnesses (Pty) Limited do not qualify for consolidation, the results of Hesto Harnesses (Pty) Limited have been
included in the segmental review as Metair has a 74.9% equity interest and is responsible for the operational 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 condensed consolidated annual financial statements for the year ended 31 December 2014 have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements for abridged reports and the requirements of the Companies Act, 71 of 2008, applicable to
summary financial statements. The Listings Requirements require abridged reports to be prepared in accordance with the framework concepts, the
measurement and recognition requirements of International Financial Reporting Standards (IFRS), IAS 34: Interim Financial Reporting, as well as the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council. 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.
Contingencies
At 31 December 2014, bank and other guarantees given by the group to third parties amounted to R3.7 million (2013: R3.7 million).
The company provided guarantees for funding to certain group subsidiaries and no material liabilities are likely to arise.
Borrowings
During the year the group repaid long-term loans of R942.5 million (2013: R58.2 million), raised long-term loans of R1.6 billion
(2013: R773.1 million), raised short-term loans of Nil (2013: R56.2 million) and repaid short-term loans of R105 million (2013: R0.1 million).
Change of directors
With effect from 25 March 2014 Mr Sjoerd Douwenga was appointed as finance director, in place of Mr Brian Jacobs.
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.
With effect from 5 November 2014 Ms Aziza Galiel resigned from the board as an independent non-executive director.
Changes to committee functions
Mr Mpueleng Pooe was appointed as an independent non-executive chairman of the board. Mr David Wilson was appointed as an independent
non-executive director and as a member of the audit and risk committee. Messrs Sjoerd Douwenga and Ken Lello were appointed as members of the
social and ethics committee and Mr Ralph Broadley was appointed as acting chairman of the social and ethics committee.
Auditors' report
This condensed 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 64
Notice is hereby given that a gross cash dividend of 80 cents per share has The following additional information is disclosed with regard
been declared by the board in respect of the year ended 31 December 2014. to the dividend:
The dividend has been declared out of income reserves. – the local dividend tax rate is 15%;
The salient dates for the payment of the dividend are detailed below: – no STC credits were utilised;
Last day of trade Friday, 17 April 2015 - the gross local dividend amount is 80 cents per share for
Shares to commence trading ex-dividend Monday, 20 April 2015 shareholders exempt from dividends tax;
Record date Friday, 24 April 2015 - the net local dividend amount is 68 cents per share for
Payment of dividend Tuesday, 28 April 2015 shareholders liable to pay a dividend tax;
– Metair's issued share capital is 198 985 886 (which includes
2 108 312 treasury shares); and
– Metair's income tax reference number is 9300198711.
Shareholders will not be permitted to dematerialise or rematerialise their share certificates between Monday, 20 April 2015 and Friday,
24 April 2015, both days inclusive.
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
6 May 2015 at 14h00 at AstroTech Conference Centre, Cnr of Anerley Road and Third Avenue, Parktown, Johannesburg.
INTEGRATED REPORT
The group's sustainability reporting included in the annual report for 2014 and the results presentation will be available on the company's
website (www.metair.co.za).
Highlights from the integrated report:
The majority of the South Carbon footprint Production-adjusted energy Brand building Battery research and
African subsidiaries are level 3 decreased by 2.3% consumption limited to 4.29% awareness increased development
contributors to BBBEE increase across the group centre planned
The 2014 results presentation will be available on the company's website (www.metair.co.za) and an investor and analyst audio webcast of the
presentation will be broadcast on Thursday, 26 March 2015 at 14h00. The audio webcast can be accessed through http://www.corpcam.com/
Metair26032015. Alternatively a telephone conference call facility will be available at 14h00 on Thursday, 26 March 2015 in SA on
011 535 3600/010 201 6800 or internationally on +27 11 535 3600/+27 10 201 6800.
REGISTRARS SPONSOR INVESTOR RELATIONS
Computershare Investor Services (Pty) Limited One Capital Instinctif Partners
70 Marshall Street
JOHANNESBURG 2001
Signed on behalf of the board in Johannesburg on 25 March 2015
OME Pooe – Chairman CT Loock – Managing director
The condensed consolidated report was produced under the supervision of Mr S Douwenga (finance director) B Comm (Hons), CA (SA).
EXECUTIVE DIRECTORS: CT Loock (managing); S Douwenga (finance)
NON-EXECUTIVE DIRECTORS: A Joffe
INDEPENDENT NON-EXECUTIVE DIRECTORS: OME Pooe (chairman); RS Broadley; L Soanes*; JG Best; SG Pretorius; DR Wilson
COMPANY SECRETARY: SM Vermaak
*British
OPERATING RESULTS
Metair is a business built around manufacturing excellence, so everything we do is done by design, rather than as a result of opportunism or
chance. Our vision, our values and our strategic blueprint determine our actions and our guiding principle of custodianship means that we integrate
social, governance and environmental priorities alongside the financial.
Business in redesign
The two significant international acquisitions we made in the last three years triggered the start of a redesign phase. With the Mutlu Akü
acquisition we achieved our goal of balancing the contribution from original equipment (OE) and non-OE business, and between battery and
non-battery business.
Excellent results in a challenging economic environment
The group produced an excellent set of results in another challenging operating year. Revenue grew 39% to R7.3 billion and EBITDA rose to
R1.2 billion from R729 million (excluding transaction costs) in 2013, with operating profit margins increasing by 2.9% to 11.4%. Headline earnings
rose to R593 million and HEPS increased 38% to 303 cents per share.
Despite the impact of additional interest and depreciation charges associated with the Mutlu acquisition, operating profit and profit before tax
improved by R384 million and R308 million respectively.
Cash generated from operations increased by 44% to R847 million (2013: R588 million) reflecting the increased profitability which was offset by
the additional investment in working capital. This resulted in cash and cash equivalents increasing to R472 million from R408 million in 2013.
Net debt (borrowings less cash and cash equivalents) increased to R1.3 billion at year-end. The R472 million increase from 2013 was largely due
to additional funding used to buy out minorities of Mutlu Akü during the mandatory tender offer process.
Given the redesign cycle that Metair is going through, the group strives to ensure that it has an efficient capital structure without introducing
increased levels of financial risk. As a result, our capital structure remains conservatively leveraged and reflects a debt/equity ratio of 30%. The
group has loans from third parties of R1.7 billion and these have been used mainly for the acquisition of Mutlu Akü. The group is in compliance
with all of its lenders' covenants and, as at 31 December 2014 had unutilised facilities of approximately R3.5 billion.
Mutlu Akü integration and acquisition
Metair is very pleased with the improved financial performance of Mutlu Akü on a standalone basis, which increased EBITDA (excluding foreign
exchange gains and losses) by 17% compared to the previous year, primarily through the intense focus on manufacturing efficiencies and
operational expense control.
With the fast-changing geopolitical environment, our efforts were directed at the elements under our control, while declining market demand in
Turkey, neighbouring countries and Russia was closely monitored and where possible, contained.
Strong growth in Start/Stop batteries
Start/Stop systems continue to cement their position as the most viable current technology available to meet tightening emissions targets in the
short and medium term.
We have been very pleased with the high levels of technical expertise and innovation we found in Mutlu Akü and are now centralising the group's
research and development centre at our Turkish operation. At the time of the acquisition, Mutlu Akü was supplying three OEM customers with EFB
batteries and both Mutlu Akü and Rombat added contracts to supply Renault during the year.
Uptake of excess battery capacity
The initial acquisition integration and excellent first year financial performance has been set as a standard. The challenge remains in the medium-
to long-term delivery of these acquisitions on the strategic objectives set for them. In both the Mutlu Akü and Rombat acquisitions one of the
strategic objectives revolved around the transfer of technologies to enable the utilisation of identified spare capacity.
AGM batteries are larger and have tighter specifications than traditional lead acid batteries and EFBs. We estimate the spare capacity available in
the group currently to be around 2.25 million batteries. Our intent is to sell this capacity in the medium term.
Labour instability and electricity supply disruptions weaken South Africa's strategic position in the industry
While there were no strikes at our operations, we find it concerning that labour and business appear to have such divergent views when the
future prosperity of each is so deeply dependent on the other. The labour challenges in South Africa continued in 2014, with a four-week strike
in the Steel/Metal and Engineering sector, which impacted on the automotive industry, but fortunately, through effective contingency planning,
disrupted OEMs for only two weeks.
Labour disruptions and other disruptions such as electricity supply disruptions, cause instability in the manufacturing process, affect our ability to
structure our operations appropriately and undermine financial sustainability.
The group increased its electricity standby capacity during the period, to prevent any loss of production due to interruptions to continuous
manufacturing processes that could paralyse our facilities for long periods. These contingency plans can only be implemented in the fabrication
environment in which Metair operates but unfortunately will be more difficult for our raw material suppliers to replicate in their upstream
beneficiation processes.
We were therefore fortunate that no major production losses were experienced due to the instability of the electrical supply chain in South Africa.
Original equipment
Vehicle production in South Africa increased 4% in 2014 to 533 120. NAAMSA forecasts 593 000 vehicles for 2015 and 645 000 in 2016. Despite
the solid support from the Automotive Production and Development Programme, we believe that the ceiling for South African production has
prematurely hardened around these levels.
Our OE businesses in Turkey and Romania traded at an acceptable level against the backdrop of model changes and rising inflation in Turkey.
Turnover for the original equipment segment increased 15% to R3.7 billion, contributing 46% to group revenue and 28% to operating profit before
reconciling items.
Aftermarket
Competition in the aftermarket continues to intensify. The South African operations have seen increased competition from cheap imports from
China and Korea. Volumes were suppressed in Romania and Turkey due to the unusually warm northern hemisphere winter and geopolitical
instability in our export destinations. The fire at FNB during the year interrupted production and cost us market share, which we are slowly gaining
back. Our strategy remains to focus on quality and raise the profile of our brands.
The aftermarket segment achieved a 66% increase in turnover to R3.7 billion, which represents 45% of group turnover. Margins improved to
15.2% (2013:12.9%) as a result of the strong contribution from Mutlu Akü and the group's focus on overall efficiency.
Looking ahead
The redesign of Metair will continue in the year ahead as we adjust to the challenges and opportunities that have been identified and set out in the
integrated report. Acquisitions executed during the redesign process, although both aggressive and defensive in design, were always weighted on
the aggressive side. We will continue to seek acquisitions that leverage the group's technology, expertise and balance sheet.
During 2015 and 2016 our OE customers will be undergoing a number of model changes. Although challenging in the short term, this presents an
opportunity in the medium to long term. We are extremely pleased that we have secured our participation in these planned model changes. The
nature of our OE business is that it requires higher levels of capital investment in periods of model changes combined with temporary reductions
in production volumes. The opportunity lies in the successful launch of such new models, with volume growth potential depending on the market
penetration of the new models.
In the year ahead, we will continue to unlock the synergies in our acquisitions, keep our focus on manufacturing excellence in all of our operations,
grow our brands in the aftermarket and focus on selling the spare capacity in our batteries business.
Metair's performance in the year ahead is dependent upon, inter alia, the successful execution of our strategy, OE volumes, geopolitical conditions,
a peaceful labour environment, continuous supply of electricity, efficiency improvements, internal inflation recoveries and the exchange rate.
Subject to such factors, we expect 2015's financial performance to be satisfactory but more challenging than 2014.
In closing, I would like to thank our customers for their business, my executive team for their support, the board for their guidance and counsel, our
employees for their hard work and all stakeholders for their interaction and participation.
Date: 26/03/2015 07:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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