Wrap Text
Condensed audited consolidated results for the year ended 31 December 2016 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 2016 AND DIVIDEND ANNOUNCEMENT
Revenue (million)
2014 7 279
2015 7 732
2016 8 954
EBITDA (million)
2014 1 158
2015 1 092
2016 1 034
HEPS (cents)
2014 303
2015 248
2016 229
SEGMENT CONTRIBUTION 2016*
Revenue
Energy storage 59%
Automotive components 41%
PBIT
Energy storage 69%
Automotive components 31%
* Includes Hesto
CONDENSED CONSOLIDATED INCOME STATEMENT
31 December 31 December
2016 2015
R'000 R'000
Revenue from sales of goods 8 953 710 7 732 479
Cost of sales (7 352 251) (6 184 034)
Gross profit 1 601 459 1 548 445
Other operating income 110 777 188 236
Distribution, administrative and other operating expenses (980 800) (947 063)
Operating profit 731 436 789 618
Interest income 33 296 33 478
Interest expense (187 905) (136 277)
Share of results of associates 29 665 57 919
Profit before taxation 606 492 744 738
Taxation (138 434) (189 843)
Profit for the period 468 058 554 895
Attributable to:
Equity holders of the company 447 930 527 423
Non-controlling interests 20 128 27 472
468 058 554 895
Depreciation and amortisation included in the above expenses 272 925 244 681
Operating lease rentals included in the above expenses 44 660 36 647
Earnings per share
Basic earnings per share (cents) 227 267
Headline earnings per share (cents) 229 248
Diluted earnings per share
Diluted earnings per share (cents) 225 266
Diluted headline earnings per share (cents) 228 247
Number of shares in issue ('000) 198 986 198 986
Number of shares in issue excluding treasury shares ('000) 197 790 197 627
Weighted average number of shares in issue ('000) 197 784 197 216
Adjustment for dilutive shares ('000) 915 934
Number of shares used for diluted earnings calculation ('000) 198 699 198 150
Calculation of headline earnings (R'000)
Net profit attributable to ordinary shareholders 447 930 527 423
Profit on insurance recovery from fire (PPE) – net (1 308)
Profit on disposal of property, plant & equipment – net (1 416) (2 818)
Impairment of property, plant and equipment 1 089
Impairment of associate 5 000
Profit on sale of associate – net (6 177)
Gain from bargain purchase (28 695)
Headline earnings 452 603 488 425
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 31 December
2016 2015
R'000 R'000
Profit for the period 468 058 554 895
Other comprehensive income:
– Actuarial (losses)/gains recognised (1 108) 6 575
– Foreign exchange translation movements (1 127 532) 366 703
– Taxation on other comprehensive income/(loss) 65 (1 369)
Net other comprehensive (loss)/income (1 128 575) 371 909
Total comprehensive (loss)/income for the period (660 517) 926 804
Attributable to:
Equity holders of the company (680 210) 898 623
Non-controlling interests 19 693 28 181
(660 517) 926 804
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
31 December 31 December
2016 2015
R'000 R'000
Balance at beginning of the period 4 974 544 4 238 631
Net profit for the period 468 058 554 895
Other comprehensive (loss)/income for the period (1 128 575) 371 909
Total comprehensive (loss)/income for the period (660 517) 926 804
Share option scheme 19 443 1 687
Vesting of share-based payment obligation:
– Estimated taxation effects of utilisation of treasury shares (1 114) (3 809)
Dividend * (152 783) (188 429)
Acquisition of non-controlling interests (340)
Balance at end of the period 4 179 573 4 974 544
* An ordinary dividend of 70 cents per share was declared in 2016 in respect of the year ended 31 December 2015
An ordinary dividend of 80 cents per share was declared in 2015 in respect of the year ended 31 December 2014
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 31 December
2016 2015
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 2 857 131 3 327 427
Intangible assets 1 001 461 1 357 091
Investment in associates 387 245 235 890
Deferred taxation 4 952 5 353
4 250 789 4 925 761
Current assets
Inventory 1 608 961 1 734 860
Trade and other receivables 1 394 933 1 575 434
Taxation 31 358 23 969
Derivative financial assets 1 092 11 250
Cash and cash equivalents 744 017 769 186
3 780 361 4 114 699
Total assets 8 031 150 9 040 460
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 497 931 1 497 931
Treasury shares (10 481) (13 940)
Share-based payment reserve 95 114 75 671
Foreign currency translation reserve (660 569) 466 317
Equity accounted earnings reserve 271 336 241 671
Changes in ownership reserve (21 197) (21 197)
Retained earnings 2 904 386 2 630 982
Ordinary shareholders' equity 4 076 520 4 877 435
Non-controlling interests 103 053 97 109
Total equity 4 179 573 4 974 544
Non-current liabilities
Borrowings 986 547 1 835 635
Post-employment benefits 88 911 113 617
Deferred taxation 336 395 401 208
Deferred grant income 147 950 172 362
Provisions for liabilities and charges 48 150 55 912
1 607 953 2 578 734
Current liabilities
Trade and other payables 1 065 304 1 006 242
Borrowings 911 018 129 337
Taxation 16 350 34 264
Provisions for liabilities and charges 108 445 113 040
Derivative financial liabilities 15 492 1 820
Bank overdrafts 127 015 202 479
2 243 624 1 487 182
Total liabilities 3 851 577 4 065 916
Total equity and liabilities 8 031 150 9 040 460
Net asset value per share (cents) attributable to ordinary shareholders 2 059 2 468
calculated on number of shares in issue excluding treasury shares
Capital expenditure 372 946 496 955
Capital commitments:
– Contracted 46 124 122 201
– Authorised but not contracted 141 214 256 708
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS*
31 December 31 December
2016 2015
R'000 R'000
Operating activities
Profit before taxation 606 492 744 738
Net finance costs 153 238 116 777
Depreciation and amortisation 272 925 244 681
Other non-cash items 29 202 (123 411)
Working capital changes (28 390) (164 201)
Cash generated from operations 1 033 467 818 584
Interest paid (186 534) (150 255)
Taxation paid (133 752) (174 120)
Dividends paid (152 783) (188 429)
Dividend income from associates 58 888
Net cash inflow from operating activities 560 398 364 668
Investing activities
Interest received 33 296 33 478
Acquisition of property, plant and equipment (293 995) (485 710)
Acquisition of associate (121 986)
Net cash (utilised)/generated in other investing activities (44 294) 8 524
Net cash outflow from investing activities (426 979) (443 708)
Net cash (outflow)/inflow from financing activities (53 589) 176 226
Net increase in cash and cash equivalents 79 830 97 186
Cash and cash equivalents at beginning of the period 566 707 472 473
Exchange losses on cash and cash equivalents (29 535) (2 952)
Cash and cash equivalents at end of the period 617 002 566 707
*
The condensed cash flow has been expanded to provide additional information. Comparative figures have been aligned
for consistency.
CONDENSED CONSOLIDATED SEGMENT REVIEW
Revenue Profit before interest and taxation
31 December 31 December 31 December 31 December
2016 2015 2016 2015
R'000 R'000 R'000 R'000
Energy storage
Automotive
Local 3 598 149 2 946 904 334 096 340 588
Direct export 1 516 901 1 181 398 145 906 105 118
5 115 050 4 128 302 480 002 445 706
Industrial
Local 685 764 741 739 77 733 92 657
Direct export 50 108 57 501 489 7 224
735 872 799 240 78 222 99 881
Total energy storage 5 850 922 4 927 542 558 224 545 587
Automotive components
Local
Original equipment 3 580 962 3 000 767 189 922 266 077
Aftermarket 470 565 446 252 48 832 54 098
Non-auto 38 090 31 739 1 251 1 936
4 089 617 3 478 758 240 005 322 111
Direct exports
Original equipment 17 879 121 819 736 20 912
Aftermarket 35 303 24 131 6 198 1 985
53 182 145 950 6 934 22 897
Total automotive components 4 142 799 3 624 708 246 939 345 008
Total segment results 9 993 721 8 552 250 805 163 890 595
Reconciling items:
- Share of results of associates 29 665 57 919
- Managed associates * (1 040 011) (819 771) 11 699 (48 151)
- Profit on sale of associate 10 705
Amortisation of intangible assets arising from business acquisitions (40 308) (47 995)
Bargain purchase from Dynamic acquisition 28 695
Other reconciling items ** (45 118) (44 231)
Total 8 953 710 7 732 479 761 101 847 537
Net interest expense (154 609) (102 799)
Profit before taxation 606 492 744 738
* 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 results for the year ended 31 December 2016 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 and 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 results 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
There has been no material change in the group's contingent liabilities since period-end.
Borrowings
During the year the group repaid borrowings of R122.8 million (2015: R38.7 million) and raised borrowings of R80 million (2015: R263.1 million).
Change of directors
Mr A Joffe resigned as a non-executive director with effect from 1 January 2016. Ms PPJ Derby and Ms TN Mgoduso were appointed as independent non-executive
directors of the board with effect from 1 March 2016. With effect from 1 March 2016, Mr RS Broadley stepped down as chairman of the Remuneration Committee
("Remco") but remained a member of Remco, and Ms Mgoduso was appointed as the chairman of the Remco. Ms Derby was appointed as a member of the Social and
Ethics Committee ("Social Com") with effect from 1 March 2016. Mr DR Wilson resigned as a non-executive director of the board and as a member of the Audit and Risk
Committee with effect from 1 November 2016. Ms G Motau was appointed as an independent non-executive director and as a member of the Audit and Risk Committee
with effect from 1 November 2016. With effect from 20 October 2016, Mr Broadley stepped down as chairman of the Social Com but remained a member of the Social
Com, and Ms Derby was appointed as chairperson of the Social Com.
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 condensed consolidated results 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 by the auditors.
Declaration of Ordinary Dividends No 66
Notice is hereby given that a gross cash dividend of 70 cents per share has been declared by the The following additional information is disclosed with regard to
board in respect of the year ended 31 December 2016. the dividend:
– the local dividend tax rate is 20%;
The dividend has been declared out of income reserves. – the gross local dividend amount is 70 cents per share for
shareholders exempt from dividends tax;
The salient dates for the payment of the dividend are detailed below: – the net local dividend amount is 56 cents per share for shareholders
Last day of trade Tuesday 18 April 2017 liable to pay a dividend tax;
Shares to commence trading ex-dividend Wednesday 19 April 2017 – Metair's issued share capital is 198 985 886 (which includes
Record date Friday 21 April 2017 1 015 527 treasury shares); and
Payment of dividend Monday 24 April 2017 – Metair's income tax reference number is 9300198711
Shareholders will not be permitted to dematerialise or rematerialise their share certificates between Wednesday 19 April 2017 and Friday 21 April 2017 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 5 May 2017 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 2016 and the results presentation will be available on the company's website (www.metair.co.za).
Highlights from the integrated report:
Most of the South African
subsidiaries at B-BBEE
Level 4 or better
Multi-year contract for
enhanced flooded battery
Start/Stop finalised with
a German OEM
Despite model change
year, headline earnings per
share decrease limited to
8% to 229 cents per share
Revenue increased 16%
to R8.95 billion
First lithium-ion automotive
and industrial products produced
The 2016 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, 23 March 2017 at 14h00. The audio webcast can be accessed through http://www.corpcam.com/Metair23032017. Alternatively a telephone conference call facility
will be available at 14h00 on Thursday, 23 March 2017 on +27 (0) 11 535 3600 / +27 (0) 10 201 6800.
REGISTRARS SPONSOR INVESTOR RELATIONS
Computershare Investor Services (Pty) Limited One Capital Instinctif Partners
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
Signed on behalf of the board in Johannesburg on 22 March 2017
SG Pretorius – Chairman C T Loock – Managing Director
The condensed consolidated results were 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; TN Mgoduso; PPJ Derby; G Motau
COMPANY SECRETARY: SM Vermaak
*British
ABRIDGED RESULTS COMMENTARY
It seems clear that the increased levels of global and local uncertainty represent the new norm. Things
have never changed more quickly, more frequently and more significantly than is the case today. Metair's
performance in 2016 was significantly impacted by several unexpected events, many of which were
outside of our control.
We planned for a difficult year in 2016 and highlighted several of the challenges we saw ahead in last
year's report, including a new model launch, the settling down of overseas acquisitions, geopolitical
and security issues.
Trading for the period ended 31 December 2016 started with a model change in the automotive
components vertical and the company had to navigate the complexities around the model launch in the
first half of the year. Fortunately most of the automotive components businesses, except for the wire
harness business, managed to settle during the second half of the year putting most of the premium
support cost associated with the launch behind them.
The energy vertical had a strong finish to the year as the Turkish and Romanian battery businesses experienced
record production output for the year on the back of excellent last quarter demand. On the other hand, trading in
the energy storage vertical in South Africa proved to be difficult in the second half of the year.
Results
Group revenue increased 16% to R8.95 billion, with the strong operational performance in the energy storage
business in Turkey and Romania. The energy storage vertical achieved revenue growth of 19% but operating
profit grew 2% due to the difficult trading environment in South Africa. The automotive component business was
impacted by the costs and production inefficiencies associated with a new model launch and by operation-specific
challenges at Hesto, although production and margins recovered reasonably well by year end. The overall impact of
these trends was a decrease in operating profit margin to 8.2% (2015: 10.2%) and group earnings before interest,
tax, depreciation and amortisation (EBITDA) decreased 5% to R1 billion. Headline earnings decreased 7% to R453
million and headline earnings per share declined 8% to 229 cents per share.
The net debt/equity ratio of 31% remains conservative and group borrowings from third parties increased
marginally to R1.9 billion. The group continues to be in compliance with all of its lenders' covenants and
is well positioned to repay or refinance the first tranche of debt from the Mutlu Akü acquisition. As at 31
December 2016, Metair had access to unutilised facilities of approximately R1.2 billion (Rand equivalent),
US$79 million and a revolving credit facility of R379 million.
Automotive component vertical(Including Hesto)
The business managed to achieve low double digit full year turnover growth as technology advancements
and an overall weaker Rand, supported by product and customer expansion, countered the anticipated
10% overall volume reduction linked to our major product exposure associated with new models.
This vertical achieved profit before interest and tax ("PBIT") margins of 6% for the full year, although
margins in the second half were higher than the guidance provided previously of between 6% and 8%.
This is due to improved stability in production volumes and manufacturing efficiency, elimination of the
premium support cost associated with the model launch and the benefit of a stronger Rand relative to the
Euro, US Dollar and Japanese Yen in the last quarter of 2016.
The automotive components vertical revenue increased 14% to R4 143 billion, contributing 41% to group
revenue and 31% to operating profit.
Energy storage vertical
Traditionally strong seasonal volume demand in the winter markets served by Rombat and Mutlu Akü in
Europe and the Middle East, supported by a strong performance from Mutlu Akü in particular, resulted in
growth in operating profit for the full year within these markets.
Within the South African market, margins were negatively impacted by local market competition which
intensified during the second half of the year, as well as disruption and inefficiency caused by the
establishment of a dedicated original equipment manufacturer production facility.
The energy storage vertical contributed R5 851 billion (59%) to group revenue, an increase of 19% and
69% to operating profit.
Technology and innovation landscape
A new path is being set for future automotive and energy storage products by disruptive technologies
and business models driven by advances in innovation. This trend is supported by increasingly
economically-active millennials who demand more environmentally- and people-friendly products.
Recent scandals in the automotive vehicle market are also accelerating the adoption of new technologies.
Fortunately for Metair, these new requirements and potential market demand shifts have resulted in an
increase in energy demand from all products. Our experience with lithium-ion applications in our mining
cap lamp and automotive starter batteries demonstrates our institutional knowledge and expertise in
identifying new technology applications.
Dividend
The board has approved a dividend of 70 cents per share for the year ending 31 December 2016.
Looking ahead
We believe that 2016 demonstrated Metair's resilience through the group's ability to finish the year on a
positive note after such a challenging start. We are also pleased with our progress against the ESG targets
we set for ourselves in 2016. While we did not achieve all of our goals, the ambitious levels at which
these were set, signalled our commitment to making progress in these important areas.
Considering the shift in the automotive component business to a lower production ceiling in 2017,
together with significantly increased complexity and variability, we will focus on strengthening our
adaptability and flexibility to meet our customers' requirements without compromising the company's
financial sustainability. We expect that 2017 will present a more stable operating environment for
FNB in South Africa with a special marketing effort to overcome competition in the energy storage
business, together with a settled new production facility, to ensure that FNB improves its performance.
It is unfortunate that the socio-political climate in Turkey led to an attempted coup with continued
geopolitical instability, related risk and Turkish Lira volatility. The positive effect of the
devaluation is an increase in our product offering competitiveness in the local and export market. The
negative effect will only fully crystallise during 2017 if the Turkish Lira settles at a lower level, reducing
Mutlu Akü's contribution to group earnings when this is converted into South African Rands. Although
all the industrial reasons for investing in Mutlu Akü remain very sound, it will be difficult to completely
guard against the effects of a serious currency crisis in Turkey.
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, efficiency improvements, internal inflation
recoveries and the exchange rate. Subject to such factors, we expect the group's financial performance in 2017 to
improve, particularly since the disruption of the new vehicle launch phase is behind us.
We thank our customers for their business – particularly those who put their trust in us by involving us in
the launch of a new product or by awarding us new business in new technologies.
Date: 23/03/2017 07:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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