Wrap Text
Condensed audited consolidated results for the year ended 31 December 2017 and dividend announcement
METAIR INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
("Metair" or "the group" or "the company")
Condensed audited consolidated results for the year ended
31 December 2017 and dividend announcement
(Reg No. 1948/031013/06) Share code: MTA ISIN code: ZAE 000090692
Headline earnings per share increased 23% to 281 cents per share
Revenue increased 6% to R9.5bn billion
Acquisition of 25% of MOLL provides a presence in Germany and micro-entry into with through partner Chaowei
B-BBEE Level 4 or better for most South African subsidiaries
First lithium-ion battery powered concept vehicle produced in Romania
CONDENSED CONSOLIDATED INCOME STATEMENT
31 December 31 December
2017 2016
R'000 R'000
Revenue 9 516 657 8 953 710
Cost of sales (7 760 976) (7 352 251)
Gross profit 1 755 681 1 601 459
Other operating income 88 678 110 777
Distribution, administrative and other operating expenses (996 846) (980 800)
Operating profit 847 513 731 436
Interest income 26 179 33 296
Interest expense (200 867) (187 905)
Share of results of associates 102 989 29 665
Profit before taxation 775 814 606 492
Taxation (188 242) (138 434)
Profit for the period 587 572 468 058
Attributable to:
Equity holders of the company 556 182 447 930
Non-controlling interests 31 390 20 128
587 572 468 058
Depreciation and amortisation included in the above
expenses 265 779 272 925
Operating lease rentals included in the above expenses 37 331 44 660
Earnings per share
Basic earnings per share (cents) 281 227
Headline earnings per share (cents) 281 229
Diluted earnings per share
Diluted earnings per share (cents) 279 225
Diluted headline earnings per share (cents) 279 228
Number of shares in issue ('000) 198 986 198 986
Number of shares in issue excluding treasury shares ('000) 198 003 197 790
Weighted average number of shares in issue ('000) 197 987 197 784
Adjustment for dilutive shares ('000) 1 068 915
Number of shares used for diluted earnings calculation
('000) 199 055 198 699
Calculation of headline earnings (R'000)
Net profit attributable to ordinary shareholders 556 182 447 930
Profit on disposal of property, plant & equipment – net (595) (1 416)
Impairment of property, plant and equipment 1 089
Impairment of associate 5 000
Headline earnings 555 587 452 603
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 31 December
2017 2016
R'000 R'000
Profit for the period 587 572 468 058
Other comprehensive income:
– Actuarial gains/(losses) recognised 7 116 (1 108)
– Foreign exchange translation movements (443 988) (1 127 532)
– Taxation on other comprehensive (loss)/income (1 546) 65
Net other comprehensive loss (438 418) (1 128 575)
Total comprehensive income/(loss) for the year 149 154 (660 517)
Attributable to:
Equity holders of the company 117 646 (680 210)
Non-controlling interests 31 508 19 693
149 154 (660 517)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
31 December 31 December
2017 2016
R'000 R'000
Balance at beginning of the year 4 179 573 4 974 544
Net profit for the period 587 572 468 058
Other comprehensive loss for the year (438 418) (1 128 575)
Total comprehensive income/(loss) for the year 149 154 (660 517)
Share option scheme 20 683 19 443
Vesting of share-based payment obligation:
– Estimated taxation effects of utilisation of treasury shares (115) (1 114)
Dividend* (153 758) (152 783)
Balance at end of the year 4 195 537 4 179 573
* An ordinary dividend of 70 cents per share was declared in 2017 in respect of the year ended 31 December 2016.
An ordinary dividend of 70 cents per share was declared in 2016 in respect of the year ended 31 December 2015.
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 31 December
2017 2016
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 2 605 737 2 857 131
Intangible assets 834 572 1 001 461
Investment in associates 580 440 387 245
Deferred taxation 12 869 4 952
4 033 618 4 250 789
Current assets
Inventory 1 697 663 1 608 961
Trade and other receivables 1 669 985 1 394 933
Taxation 32 985 31 358
Derivative financial assets 314 1 092
Cash and cash equivalents 670 653 744 017
4 071 600 3 780 361
Total assets 8 105 218 8 031 150
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 497 931 1 497 931
Treasury shares (10 152) (10 481)
Share-based payment reserve 115 797 95 114
Foreign currency translation reserve (1 104 558) (660 569)
Equity accounted earnings reserve 322 388 271 336
Changes in ownership reserve (21 197) (21 197)
Retained earnings 3 275 935 2 904 386
Ordinary shareholders' equity 4 076 144 4 076 520
Non-controlling interests 119 393 103 053
Total equity 4 195 537 4 179 573
Non-current liabilities
Borrowings 1 148 806 986 547
Post-employment benefits 78 724 88 911
Deferred taxation 298 326 336 395
Deferred grant income 175 440 147 950
Provisions for liabilities and charges 52 951 48 150
1 754 247 1 607 953
Current liabilities
Trade and other payables 1 235 708 1 065 304
Borrowings 652 689 911 018
Taxation 29 260 16 350
Provisions for liabilities and charges 135 567 108 445
Derivative financial liabilities 28 862 15 492
Bank overdrafts 73 348 127 015
2 155 434 2 243 624
Total liabilities 3 909 681 3 851 577
Total equity and liabilities 8 105 218 8 031 150
Net asset value per share (cents) attributable to ordinary
shareholders calculated on number of shares in issue
excluding treasury shares 2 059 2 059
Capital expenditure 220 414 372 946
Capital commitments:
– Contracted 53 524 46 124
– Authorised but not contracted 295 949 141 214
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2017 2016
R'000 R'000
Operating activities
Profit before taxation 775 814 606 492
Net finance costs 181 733 153 238
Depreciation and amortisation 265 779 272 925
Other non-cash items 4 633 29 202
Working capital changes (322 855) (28 390)
Cash generated from operations 905 104 1 033 467
Interest paid (207 912) (186 534)
Taxation paid (185 307) (133 752)
Dividends paid (153 758) (152 783)
Dividend income from associates 51 937
Net cash inflow from operating activities 410 064 560 398
Investing activities
Interest received 26 179 33 296
Acquisition of property, plant and equipment (165 429) (293 995)
Acquisition of associate (144 302) (121 986)
Net cash utilised in other investing activities (15 271) (44 294)
Net cash outflow from investing activities (298 823) (426 979)
Net cash outflow from financing activities (88 504) (53 589)
Net increase in cash and cash equivalents 22 737 79 830
Cash and cash equivalents at beginning of the year 617 002 566 707
Exchange losses on cash and cash equivalents (42 434) (29 535)
Cash and cash equivalents at end of the year 597 305 617 002
CONDENSED CONSOLIDATED SEGMENT REVIEW
Revenue Profit before interest and taxation
31 December 31 December 31 December 31 December
2017 2016 2017 2016
R'000 R'000 R'000 R'000
Energy storage
Automotive
Local 3 864 239 3 598 149 336 517 334 096
Direct export 1 670 904 1 516 901 158 350 145 906
5 535 143 5 115 050 494 867 480 002
Industrial
Local 652 211 685 764 92 207 77 733
Direct export 33 160 50 108 4 502 489
685 371 735 872 96 709 78 222
Total energy storage 6 220 514 5 850 922 591 576 558 224
Automotive components
Local
Original equipment 3 832 194 3 580 962 357 277 189 922
Aftermarket 458 895 470 565 70 312 48 832
Non-auto 25 895 38 090 295 1 251
4 316 984 4 089 617 427 884 240 005
Direct exports
Original equipment 5 163 17 879 2 021 736
Aftermarket 37 784 35 303 6 966 6 198
42 947 53 182 8 987 6 934
Total automotive components 4 359 931 4 142 799 436 871 246 939
Total segment results 10 580 445 9 993 721 1 028 447 805 163
Reconciling items:
- Share of results of associates 102 989 29 665
- Managed associates* (1 063 788) (1 040 011) (99 015) 11 699
Amortisation of intangible assets arising from business
acquisitions (30 628) (40 308)
Other reconciling items** (51 291) (45 118)
Total 9 516 657 8 953 710 950 502 761 101
Net interest expense (174 688) (154 609)
Profit before taxation 775 814 606 492
* Although the results of Hesto Harnesses Proprietary Limited ("Hesto") does not qualify for consolidation, the full results of
Hesto 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 2017 have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements (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 R616.5 million (2016: R122.8 million) and raised borrowings of R540.6 million
(2016: R80 million).
Change of directors
Mr JG Best has been appointed as lead independent director on 30 November 2017 and will act in this capacity for a period of
12 months from the date of appointment. Mr B Mawasha has been appointed as an independent non-executive director of the
board and member of the company's audit and risk committee with effect from 1 March 2018. Mr L Soanes resigned as member
of the audit and risk committee with effect from 1 March 2018.
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 that 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 Dividend No 67
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 2017. to the dividend:
– the local dividend tax rate is 20%;
The dividend has been declared out of income reserves. – the gross local dividend amount is 80 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 64 cents per share for
Last day of trade Tuesday, 17 April 2018 shareholders liable to pay a dividend tax;
Shares to commence trading ex-dividend Wednesday, 18 April 2018 – Metair's issued share capital is 198 985 886 (which
Record date Friday, 20 April 2018 includes 982 822 treasury shares); and
Payment of dividend Monday, 23 April 2018 – Metair's income tax reference number is 9300198711.
Shareholders will not be permitted to dematerialise or rematerialise their share certificates between Wednesday, 18 April 2018 and Friday,
20 April 2018, 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 2 May 2018 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 2017 and the results presentation will be available on the
company's website (www.metair.co.za).
The 2017 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, 15 March 2018 at 14h00. The audio webcast can be accessed
through http://www.corpcam.com/Metair15032018. Alternatively a telephone conference call facility will be available at 14h00
on Thursday, 15 March 2018 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
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
Signed on behalf of the board in Johannesburg on 14 March 2018.
SG Pretorius – Chairman CT 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; B Mawasha
COMPANY SECRETARY: SM Vermaak *British
ABRIDGED RESULTS COMMENTARY
Metair performed very well in 2017 as we continue to operate in a very dynamic
and challenging environment especially as technology shifts in propulsion solutions
develop in the mobility space.
Adjustments and preparations to accommodate these shifts brought about the need
to deepen the understanding of Metair's business design platform and expand our
business narrative.
In the absence of major technology or market shifts, it was acceptable for the Metair
business narrative to be centred around our products. This is no longer the case
and we need to shift our business narrative to focus on the needs that our products
fulfil and market messaging that is aligned and well understood by stakeholders.
In our energy storage vertical, we provide energy and finally sell watt-hours. Good
progress was made in becoming a diversified multi-site Giga factory. The energy
storage vertical sold 9.7 Giga watt-hours of our 11.5 Giga watt-hours capacity. Our
total Giga watt-hours sales were on par with Tesla's Giga factory automotive output.
Metair cannot be a single site Giga factory as our customer base is in multiple
locations and the watt-hours we sell are required by vehicle manufacturers and
vehicle owners in different countries and diverse geographical locations. Our
strategy is to become a multiple site Giga factory.
In our automotive components vertical, we sell a number of product solutions
ranging from lighting, ride comfort, heat exchange, vehicle electrical distribution and
plastic part solutions. These solutions are only provided in the South African market
with solution specific manufacturing sites all over South Africa. Our operations sold
1.2 million lighting units, 25.2 million plastic mouldings, 2.7 million wiring harnesses,
0.7 million brake system parts, 6.1 million HVAC system parts and 1.5 million
suspension systems. Enough to supply the equivalent of 200 000 Teslas.
Our challenge in an ever-changing technology environment is to keep up with
product development to fulfil the energy (watt-hour) and components (parts)
requirement of our international customer base.
The automotive vertical bounced back after a difficult 2016, returning to good
profitability levels after the disruptions of the new vehicle launch. Hesto in particular
moved from a loss last year back to a profit contribution.
Results
Group revenue increased 6.3% to R9.5 billion as the automotive component
vertical regained stability. The energy storage businesses in Turkey and Romania
grew revenue by 31% in local currencies, but this reduced to 21.1% in our
consolidated accounts when translated into Rand. Operating profit grew 15.9%
and the group margin expanded to 8.9% (2016: 8.2%) supported by the margin
recovery in the automotive component businesses. Group earnings before interest,
tax, depreciation and amortisation (EBITDA) increased 17.6% to R1.2 billion and
headline earnings rose 22.8% to R555.6 million, which translated into growth in
headline earnings per share growth of 22.6% to 281 cents per share.
Metair's net debt/equity ratio of 29.5% is appropriately conservative and group
borrowings from third parties decreased marginally to R1.8 billion. We addressed
the first tranche of debt due on the Mutlu Akü acquisition in October 2017 by
redeeming two thirds from available cash and unutilised debt facilities, and
extending the date on the remainder. We also secured a number of commitments
from several leading South African banks for longer-term funding and liquidity at
very competitive rates. Metair is comfortably in compliance with all of its lenders'
covenants and at 31 December 2017, the group had access to unutilised facilities of
approximately R587 million (Rand equivalent), US$95 million and a revolving credit
facility of R83 million.
Automotive components vertical (including Hesto)
Turnover recovered strongly, increasing by 5.2% to R4.4 billion, contributing 41% to
group revenue and 42% to operating profit as production ramped up and stability
returned to the businesses following last year's model launch. Profit before interest
and tax (PBIT) margins increased to 10% from 6% in 2016 due to the benefits of
improved consistency in production volumes, manufacturing efficiency, and the
stronger Rand against the Euro, US Dollar and Japanese Yen throughout the full year.
Energy storage vertical
Revenue from the energy storage vertical increased 6.3% to R6.2 billion (59%
of group revenue) and operating profit grew 6% (58% of group operating profit).
Battery sales in Turkey and Romania peak in the winter months of the last quarter
of the year and strong performances at Rombat and Mutlu Akü over these months
partially offset the impact of depreciating currencies and higher lead input costs. In
the South African market, competition remained high and performance improved as
Phase II of the correction at First National Battery (FNB) progressed. These factors
resulted in a consistent PBIT margin of 9.5%.
Operational insight
Automotive components vertical
The exit of General Motors was a blow to the country's automotive industry. We are
pleased that Isuzu – our primary brand in the General Motors stable chose to remain
in the country. It is important to note our appreciation for the responsible way that
General Motors chose to exit the local industry – their assistance was crucial in
mitigating most of the retrenchments that would otherwise have been necessary.
Metair provided input into the review of the Automotive Production and
Development Programme (APDP) and believes that the programme as currently
proposed will continue to support the South African automotive industry effectively.
Energy storage vertical
Our strategic focus has shifted to bulking up the energy storage vertical and as our
geographical presence expands and we continue to demonstrate our considerable
intellectual capital in the vertical, we are receiving requests for technology transfer
from companies in our target growth areas.
Prospects
Our positive outlook on Metair's performance in the year ahead is dependent upon,
inter alia, the successful execution of our strategy, original equipment (OE) volumes,
geopolitical conditions, a peaceful labour environment, efficiency improvements,
internal inflation recoveries and the exchange rate. Subject to such factors,
we expect 2018 to be a growth year for the group.
Energy storage vertical
In the year ahead we will focus on the transfer of technology in emerging markets
and our goal is to participate in the development of an electric vehicle (EV) energy
source for at least one original equipment manufacturer (OEM). We are busy
establishing a new research and development centre in Germany in partnership with
Chaowei and MOLL while looking forward to finalising the structure of our lithium-ion
research and production division.
Automotive components vertical
Metair's outlook for South African vehicle production in the medium term has
improved and we believe volumes of 650 000 to 700 000 for the industry as a
whole (around 10% to 20% above the 563 857 units produced in 2017) could
be achievable. We also anticipate some growth from product expansions through
the addition of new OE business and expanded product ranges with existing
clients. Customer model changes planned for the next two to three years – which
do not include our major customer – will offer further opportunities for new business.
We believe that if factors including production volumes, growth opportunities,
efficiencies associated with the new technology and continued stabilisation of
manufacturing processes materialise, the profitability guidance for the vertical
needs to be updated. The adjusted sustainable medium-term PBIT margins will be
between 7% and 9%.
Appreciation
We would like to thank our shareholders, the board, management, employees,
customers and all other stakeholders for their continued support during the year.
Date: 15/03/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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