Wrap Text
Condensed audited consolidated results for the year ended 31 December 2015
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 2015
AND DIVIDEND ANNOUNCEMENT
SEGMENT CONTRIBUTION 2015*
Revenue
Energy storage 58%
Automotive components 42%
PBIT
Energy storage 61%
Automotive components 39%
* Includes Hesto
Net asset value
per share (cents)
UP 17%
Revenue (million)
5 227 7 279 7 732
2013 2014 2015
HEPS (cents)
219 303 248
2013 2014 2015
EBITDA (million)
651 1 158 1 092
2013 2014 2015
CONDENSED CONSOLIDATED INCOME STATEMENT
31 December 31 December
2015 2014
R'000 R'000
Revenue from sales of goods 7 732 479 7 278 815
Cost of sales (6 184 034) (5 695 917)
Gross profit 1 548 445 1 582 898
Other operating income 188 236 162 755
Distribution, administrative and other operating expenses (947 063) (916 272)
Operating profit 789 618 829 381
Interest income 33 478 22 698
Interest expense (136 277) (118 935)
Share of results of associates 57 919 70 006
Profit before taxation 744 738 803 150
Taxation (189 843) (170 845)
Profit for the period 554 895 632 305
Attributable to:
Equity holders of the company 527 423 601 460
Non-controlling interests 27 472 30 845
554 895 632 305
Depreciation and amortisation included in the above expenses (244 681) (258 825)
Operating lease rentals included in the above expenses (36 647) (33 628)
Earnings per share
Basic earnings per share (cents) 267 308
Headline earnings per share (cents) 248 303
Diluted earnings per share
Diluted earnings per share (cents) 266 305
Diluted headline earnings per share (cents) 247 301
Number of shares in issue ('000) 198 986 198 986
Number of shares in issue excluding treasury shares ('000) 197 627 196 878
Weighted average number of shares in issue ('000) 197 216 195 434
Adjustment for dilutive shares ('000) 934 1 549
Number of shares used for diluted earnings calculation ('000) 198 150 196 983
Calculation of headline earnings per share (R'000)
Net profit attributable to ordinary shareholders 527 423 601 460
Profit from insurance recovery from fire (PPE) – net (1 308) (4 433)
Profit on disposal of property, plant & equipment – net (2 818) (4 473)
Profit on sale of associate - net (6 177)
Gain from bargain purchase (28 695)
Headline earnings 488 425 592 554
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 31 December
2015 2014
R'000 R'000
Profit for the period 554 895 632 305
Other comprehensive income:
– Actuarial gains/(losses) recognised 6 575 (13 197)
– Exchange gains arising on translation of foreign operations 366 703 12 338
– Taxation on other comprehensive income (1 369) 2 703
Net other comprehensive income 371 909 1 844
Total comprehensive income for the period 926 804 634 149
Attributable to:
Equity holders of the company 898 623 603 502
Non-controlling interests 28 181 30 647
926 804 634 149
CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
31 December 31 December
2015 2014
R'000 R'000
Balance at beginning of the period 4 238 631 3 788 752
Net profit for the period 554 895 632 305
Other comprehensive income for the period 371 909 1 844
Total comprehensive income for the period 926 804 634 149
Share option scheme 1 687 17 033
Vesting of share-based payment obligation:
– Estimated taxation effects of utilisation of treasury shares (3 809) (12 441)
– Loss on settlement of old scheme (1 264)
Shares disposed by the Metair Share Trust 2 582
Dividend * (188 429) (169 323)
Acquisition of non-controlling interests (340) (20 857)
Balance at end of the period 4 974 544 4 238 631
* An ordinary dividend of 80 cents per share was declared in 2015 in respect of the year ended 31 December 2014
An ordinary dividend of 70 cents per share was declared in 2014 in respect of the year ended 31 December 2013
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 31 December
2015 2014
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 3 327 427 2 855 286
Intangible assets 1 357 091 1 269 895
Investment in associates 235 890 251 684
Deferred taxation 5 353 16 804
4 925 761 4 393 669
Current assets
Inventory 1 734 860 1 508 012
Trade and other receivables 1 575 434 1 401 928
Taxation 23 969 24 011
Derivative financial assets 11 250 4 365
Cash and cash equivalents 769 186 602 666
4 114 699 3 540 982
Total assets 9 040 460 7 934 651
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 497 931 1 497 931
Treasury shares (13 940) (21 475)
Share-based payment reserve 75 671 73 984
Foreign currency translation reserve 466 317 100 229
Equity accounted earnings reserve 241 671 242 640
Changes in ownership reserve (21 197) (20 857)
Retained earnings 2 630 982 2 266 646
Ordinary shareholders' equity 4 877 435 4 139 098
Non-controlling interests 97 109 99 533
Total equity 4 974 544 4 238 631
Non-current liabilities
Borrowings 1 835 635 1 670 577
Post-employment benefits 113 617 110 031
Deferred taxation 401 208 374 551
Deferred grant income 172 362 107 581
Provisions for liabilities and charges 55 912 60 290
2 578 734 2 323 030
Current liabilities
Trade and other payables 1 006 242 1 026 814
Borrowings 129 337 69 268
Taxation 34 264 24 636
Provisions for liabilities and charges 113 040 116 691
Derivative financial liabilities 1 820 5 388
Bank overdrafts 202 479 130 193
1 487 182 1 372 990
Total liabilities 4 065 916 3 696 020
Total equity and liabilities 9 040 460 7 934 651
Net asset value per share (cents) attributable to ordinary shareholders
calculated on number of shares in issue excluding treasury shares 2 468 2 102
Capital expenditure 496 956 266 567
Capital commitments:
– Contracted 122 201 54 687
– Authorised but not contracted 256 708 407 042
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2015 2014
R'000 R'000
Operating activities
Profit before taxation 744 738 803 150
Non-cash items 238 047 292 494
Working capital changes (164 201) (248 688)
Cash generated from operations 818 584 846 956
Interest paid (150 255) (89 326)
Taxation paid (174 120) (196 110)
Dividends paid (188 429) (169 323)
Dividend income from associates 58 888 18 108
Net cash inflow from operating activities 364 668 410 305
Investing activities
Interest received 33 478 22 698
Net cash utilised in other investing activities (477 186) (842 767)
Net cash outflow from investing activities (443 708) (820 069)
Net cash inflow from financing activities 176 226 471 807
Net increase in cash and cash equivalents 97 186 62 043
Cash and cash equivalents at beginning of the period 472 473 407 501
Exchange (losses)/gains on cash and cash equivalents (2 952) 2 929
Cash and cash equivalents at end of the period 566 707 472 473
CONDENSED CONSOLIDATED SEGMENT REVIEW
Revenue Profit before interest and taxation
31 December 31 December
31 December 2014 31 December 2014
2015 Restated 2015 Restated
R'000 R'000 R'000 R'000
Energy storage
Automotive
Local 2 946 904 2 624 801 340 588 391 048
Direct export 1 181 398 1 323 529 105 118 158 924
4 128 302 3 948 330 445 706 549 972
Industrial
Local 741 739 584 307 92 657 56 079
Direct export 57 501 69 413 7 224 9 184
799 240 653 720 99 881 65 263
Total energy storage 4 927 542 4 602 050 545 587 615 235
Automotive components
Local
Original Equipment 3 000 767 2 958 542 266 077 319 854
Aftermarket 446 252 399 659 54 098 41 494
Non-Auto 31 739 16 905 1 936 (2 305)
3 478 758 3 375 106 322 111 359 043
Direct exports
Original Equipment 121 819 84 829 20 912 12 598
Aftermarket 24 131 36 617 1 985 6 510
145 950 121 446 22 897 19 108
Total automotive 3 624 708 3 496 552 345 008 378 151
Total segment results 8 552 250 8 098 602 890 595 993 386
Reconciling items:
– Share of results of associates 57 919 70 006
– Managed associates * (819 771) (819 787) (48 151) (73 147)
– Profit on sale of associate 10 705
– Amortisation of intangible assets arising from business acquisitions (47 995) (48 259)
– Bargain purchase from Dynamic acquisition 28 695
– Other reconciling items ** (44 231) (42 599)
Total 7 732 479 7 278 815 847 537 899 387
Net interest expense (102 799) (96 237)
Profit before taxation 744 738 803 150
* Although the results of Hesto Harnesses Proprietary Limited does not qualify for consolidation, the full results of Hesto Harnesses Proprietary Limited have been
included in the segmental review. 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.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting policies
The condensed consolidated annual financial statements for the year ended 31 December 2015 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.
Restatement of segment review
The group has changed the basis of its segment report in the current period. The resultant impact on the business of the group following the acquisition of Rombat and Mutlu,
together with the strategic redesign of the business now places focus on energy storage and automotive components business. The comparative period has been restated to show
the historical information on the basis of the segment report in the current period.
Contingencies
The obligation under the preference share and revolving credit facilities are guaranteed on a joint and several basis by certain wholly owned subsidiaries within the
group. There has been no material change in the group's contingent liabilities since period-end.
Borrowings
During the year the group repaid long-term loans of Nil (2014: R942.5 million), raised long-term loans of R141.4 million (2014: R1.6 billion), raised short-term loans of
R121.7 million (2014: Nil) and repaid short-term loans of R38.7 million (2014: R105 million).
Change of directors
Mr Mpueleng Pooe resigned as chairman of the board with effect from 30 June 2015, Mr Brand Pretorius assumed the chairmanship of the board with effect from 1 July
2015. Mr A Joffe resigned as non-executive director of the board with effect from 1 January 2016. Ms TN Mgoduso and Ms PPJ Molefe were appointed as independent
non-executive directors of the board with effect from 1 March 2016.
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 65
Notice is hereby given that a gross cash dividend of 70 cents per The following additional information is disclosed with regard to the dividend:
share has been declared by the board in respect of the year ended – the local dividend tax rate is 15%;
31 December 2015. – the gross local dividend amount is 70 cents per share for shareholders exempt from
The dividend has been declared out of income reserves. dividends tax;
The salient dates for the payment of the dividend are detailed below: – the net local dividend amount is 59.50 cents per share for shareholders liable to pay a
Last day of trade Friday, 15 April 2016 dividend tax;
Shares to commence trading ex-dividend Monday, 18 April 2016 – Metair's issued share capital is 198 985 886 (which includes 1 359 346 treasury shares); and
Record date Friday, 22 April 2016 – Metair's income tax reference number is 9300198711
Payment of dividend Monday, 25 April 2016
Shareholders will not be permitted to dematerialise or rematerialise their share certificates between Monday, 18 April 2016 and Friday, 22 April 2016, 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 Thursday, 5 May 2016 at
14h00 at AstroTech Conference Centre, Cnr of Anerley Road & Third Avenue, Parktown, Johannesburg.
INTEGRATED REPORT
The group's sustainability reporting included in the annual report for 2015 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
African subsidiaries are level 3
contributors to B-BBEE
Group carbon footprint
decreased marginally
by 0.3%
Electricity consumption
per person hour worked
decreased 4.7%
Increased customer
sales focus
Battery research and
development
centre established
The 2015 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, 17 March 2016 at 13h00. The audio webcast can be accessed through http://www.corpcam.com/Metair17032016. Alternatively a telephone conference call facility will be
available at 13h00 on Thursday, 17 March 2016 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 16 March 2016
SG Pretorius – Chairman C T 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)
INDEPENDENT NON-EXECUTIVE DIRECTORS: SG Pretorius (Chairman); RS Broadley; L Soanes*; JG Best; DR Wilson; TN Mgoduso; PPJ Molefe
COMPANY SECRETARY: SM Vermaak
*British
ABRIDGED RESULTS COMMENTARY
Reflecting back on Metair's performance in 2015 and our history in the year in which Mutlu Akü, one of our
major international acquisitions, celebrated its 70th anniversary and as First National Batteries approaches
its 85th anniversary, our ability to continuously redesign and renew ourselves is very evident.
Metair's ability to renew itself was further tested as our major customer in South Africa reached the end of
the life of a model that was launched in 2005 and which went on to become the leading volume model in the
country, with more than a million vehicles produced across all platform derivatives.
Fortunately, the group managed to secure all targeted business on the new model replacement and thereby
refreshed 85% of our automotive components business in South Africa during this period.
Metair's redesign process was premised on the desire to bring balance to our business through reducing
our dependence on the traditional highly cyclical OE business by shifting to the annuity type aftermarket
maintenance product offering.
Presently, Metair manufactures, distributes and retails products produced in South Africa, Turkey and
Romania through a dedicated retail network, and sells to original equipment manufacturers (OEM) primarily
in Africa, Europe, Turkey, the Middle East and Russia.
The company redesign continues to progress well
Metair made good strides in the redesign of the business in 2015, despite the challenging business
environment, both globally and locally, combined with the unique geopolitical and socio-economic
challenges evident in our countries of operation. The group managed to broaden its customer base and
product range, while balancing our legacy OEM business with the establishment of the energy storage
business driving us to our goal to become a global manufacturer of energy storage solutions.
The redesign of the group over the last ten years has resulted in two distinct business verticals - energy
storage and automotive components. In prior reporting periods, segmental information was disclosed in
the then dominant market segments - original equipment, aftermarket, non-automotive and a property
segment. From 2015, segmental information is now presented according to the two new verticals, which
better aligns with the way we manage our business.
Operating environment
Operating conditions have been extremely challenging over the last twelve months, impacted by the
global and local political and economic environments. South Africa faces a range of challenges including
poor political leadership, policy confusion, power outages, labour instability and ongoing exchange rate
depreciation. Consequently, business and consumer confidence are at very low levels. Metair's automotive
components business also had to deal with the disruptive impact of model changes and, in some instances,
reduced volumes. Our Turkish business, Mutlu Akü, was affected significantly by the loss of Russian export
business due to currency weakness and geopolitical tensions in the region.
Metair produced a creditable performance under difficult circumstances, in line with our cautious outlook
statements made in last year's integrated report and when we announced our interim results in August 2015.
Management demonstrated their creativity, responsiveness and agility in the corrective actions they took,
which cushioned the impact of the negative developments to some extent.
Results
Consolidated revenue grew 6.3% to R7.7 billion, as the energy storage business grew its market share in
Turkey, both in the aftermarket and OE sectors. The automotive component business grew its product offering
through the establishment of the instrument cluster facility. However, the upfront costs and production
inefficiencies involved in supporting the new model launches at OEM clients, the loss of recycling margin at
Rombat due to lower lead market prices, increased R&D spend to support technology advancement and the
loss of exports to Russia from Mutlu, resulted in an operating profit margin decline to 10.2% (2014: 11.4%).
Metair believes it has delivered a good operational performance that resulted in satisfactory results for 2015 as
we dealt with extreme emerging market currency fluctuations during the period.
The group delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of R1.1 billion, a
decline of 6% from R1.2 billion in 2014. Headline earnings decreased to R488 million and headline earnings
per share decreased 18% to 248 cents per share.
Our capital structure remains conservatively leveraged at a net debt/equity ratio of 29%, ensuring an
efficient capital structure without introducing increased levels of financial risk. At year end, group borrowings
from third parties increased slightly to R2 billion and the group was, and continues to remain, in compliance
with all of its lenders' covenants. The group had access to unutilised facilities of approximately R3.9 billion as
at 31 December 2015.
Salient features of the 2015 results are:
- Headline earnings per share decreased 18% to 248 cents per share
- Revenue increased 6.3% to R7.7 billion
- Strong results from First National Battery
- Good results for Mutlu Akü in Turkey
- Increased customer sales focus
- Dividend per share of 70 cents declared in 2016 in respect of the 2015 financial year
- Excellent progress on delivery of the group strategy
- Mutlu Akü integration concluded as per schedule
- Most of the South African subsidiaries at B-BBEE level 3
- Battery research and development centre established
- Metair International Batteries (MIB) launched and continues to execute the sale of spare battery capacity
- Exports from Turkey challenged due to geo-political challenges
Transformation
Metair regards transformation as a moral, strategic and business imperative and we remain committed to
improving our performance under the more stringent requirements of the revised Department of Trade and
Industry B-BBEE Codes. Metair lost strategic transformation partners with the sell down by Royal Bafokeng
Holdings (RBH) that arose from changes in their circumstances. Fortunately, the group has made good
progress over the last ten years in improving its B-BBEE levels and under the inclusion principle will continue
to enjoy the fruits of the RBH empowerment transaction for a number of years. In an effort to improve
gender equality and transformation on the Metair board of directors (board), Ms Thandeka Mgoduso and Ms
Portia Molefe have been appointed as independent non-executive directors, with effect from 1 March 2016.
Outlook
Metair expects the international and local business environment to continue to be volatile and challenging,
but the group remains committed to making further progress in its strategic redesign. Metair continues to
seek acquisitions, however such acquisitions will only be considered provided they meet Metair's returns
criteria and the board has comfort regarding the group's gearing and funding capacity.
MIB is confident that it can record volume growth in the automotive segment and every effort is being made
to regain access to the Russian aftermarket. There is potential for new opportunities to emerge from the
resolution of the African Growth and Opportunity Act negotiations, as well as, from the lifting of sanctions
against Iran. Metair expects the synergistic benefits from the formation of MIB to deliver positive results.
The South African economy, however, is on the brink of a recession and new vehicle sales fell 4% to
589 000 units in 2015. Margin pressure in the automotive components business is expected to intensify
further. An additional risk lies in the three-yearly wage negotiations with unions, which is proposed to
commence shortly and may result in labour unrest.
The favourable environment created by the Automotive Production Development Program (APDP)
resulted in a boom in investment in South Africa by OEMs in 2015. Vehicle exports, at a record level of
337 748 units in 2015, are anticipated to increase by 12.5% to 380 000 vehicles in 2016. Metair secured
substantial new model business during the year and volumes are busy ramping up. The weak Rand could
also lead to an increased level of local content in new vehicles and support export growth and Metair's
automotive component business will pursue growth opportunities vigorously. The group-wide focus on cost
management will continue.
The first six months of the new financial year will be particularly tough as new model launch production
ramp up takes effect during this period. Earnings growth is unlikely in 2016 as the group is still in the process
of redesign and product renewal driven by model changes. Every effort will be made to both optimise
return on invested capital as well as cash flow. The board remains confident that successful implementation
of our strategy will deliver sustainable growth and quality earnings over the medium term. Performance
measurement in the group with the new segmental reporting will move away from return on equity (ROE)
to return on invested capital (ROIC), targeting returns above the weighted average cost of capital (WACC) for
each vertical and the group as a whole, as well as total shareholders return measures.
Dividend
In light of Metair's sound financial position, the board has approved a dividend of 70 cents per share for the
year ending 31 December 2015.
17 March 2016
Date: 17/03/2016 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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