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Condensed audited consolidated results for the year ended 31 December 2019 and dividend announcement
METAIR INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Reg No. 1948/031013/06)
Share code: MTA ISIN code: ZAE 000090692
("Metair" or "the group" or "the company")
Condensed audited consolidated results for the year ended 31 December 2019
and dividend announcement
Segmental contribution 2019*
Revenue
- Energy storage: 55%
- Automotive components: 45%
PBIT
- Energy storage: 55%
- Automotive components: 45%
* Includes Hesto
Revenue (million)
- 2017: 9 517
- 2018: 10 227
- 2019: 11 238
EBITDA (million)
- 2017: 1 216
- 2018: 1 330
- 2019: 1 394
HEPS (cents)
- 2017: 281
- 2018: 327
- 2019: 336
Year ended
FINANCIAL SUMMARY 31 December 31 December
2019 2018
R'000 R'000 Change %
Revenue 11 237 995 10 276 966 9%
Operating profit 1 018 153 1 008 670 1%
EBITDA 1 393 929 1 329 677 5%
HEPS (cents) 336 327 3%
EPS (cents) 325 338 (4%)
DPS (cents) 120 100 20%
No. of shares in issue ('000) 198 986 198 986 0%
Net asset value per share (cents) 2 186 2 167 1%
Cash generated from operations 1 229 928 887 748 39%
- Strategic review concluded and strategic direction changed
- Cash generation R1.2 billion
- Consolidated group assessed at B-BBEE level 2
- Metair reported on climate change disclosure in line with the Task Force Climate-related Financial Disclosures
(TCFD) - report available on our website
- First lithium-ion cells produced at Metair's production line in Romania
Declaration of Ordinary Dividends No 69
Notice is hereby given that a gross cash dividend of 120 cents per share has been declared by the board in respect
of the year ended 31 December 2019.
The dividend has been declared out of income reserves.
The salient dates for the payment of the dividend are detailed below:
Last day of trade Tuesday, 14 April 2020
Shares to commence trading
ex-dividend Wednesday, 15 April 2020
Record date Friday, 17 April 2020
Payment of dividend Monday, 20 April 2020
The following additional information is disclosed with regard to the dividend:
- the local dividend tax rate is 20%;
- the gross local dividend amount is 120 cents per share for
shareholders exempt from dividend tax;
- the net local dividend amount is 96 cents per share for
shareholders liable to pay a dividend tax;
- Metair's issued share capital is 198 985 886 (which includes 7 374 023 treasury shares); and
- Metair's income tax reference number is 9300198711
Shareholders will not be permitted to dematerialise or rematerialise their shares between Wednesday, 15 April 2020
and Friday, 17 April 2020, both days inclusive.
ABRIDGED RESULTS COMMENTARY - DECEMBER 2019
Metair enters 2020 and a new decade with a number of exciting opportunities, including the valuation of our Energy
Storage Vertical. This will give shareholders a platform to decide the company's future direction.
2019 performance
Metair delivered a record performance in 2019 in a changing and challenging market. Headline earnings increased to
336 cents per share compared to 327 cents in 2018, laying a sound foundation for the planned execution on awarded
business opportunities, especially in South Africa. Cash generation improved to R1.2 billion.
Group revenue of R11.2 billion represents a 9.4% increase from R10.3 billion in 2018 and operating profit grew 0.9% as
operating profit from the Automotive Components Vertical increased 5.7% and the Energy Storage Vertical delivered a
decline of 3.7%.
Group margin declined to 9.1% (2018: 9.8%) and earnings before interest, tax, depreciation and amortisation (EBITDA)
including equity earnings increased by 4.6% to R1.4 billion. Gearing remains appropriate at a net debt/equity ratio of
31% and group borrowings from third parties increased to R2.2 billion from R1.84 billion in 2018.
Automotive Components Vertical (including Hesto)
Turnover from the automotive components' businesses increased by 11.3% to R5.6 billion on improved volumes,
supported by exports and the continued expansion and deepening of localisation. Production efficiencies were
affected by volume variations as OEM customers become more market reactive and with increasing proportions of
exports, increased production flexibility appears to be the new normal. Although negotiations were protracted, we are
pleased the industry secured a new three-year wage deal during this critical phase of production expansion in South
Africa. The Automotive Component Vertical increased PBIT contribution by 5.7% to R538 million, with margins declining
to 9.5% due to volume fluctuations caused by market requirements as well as labour negotiations.
While vehicle production volumes for 2020 are forecast to be static or slightly down, the long-term outlook looks far
stronger. Metair group companies have been successful in securing major contracts arising from the new vehicle
launches planned to service the export and local markets over the next three years.
The biggest impact will be at Hesto Harnesses where Metair secured the supply of the full spectrum of wire harnesses
to a range of new customers. This could see employment rise by 3 200 employees with a capital investment of
approximately R500 million, securing turnover over the planned model life period of seven years of between R12 to
R14 billion.
The final impact will depend on model launch volumes that are under discussion with customers and would be
disclosed to the market when finalised.
This job creation opportunity made possible by the deepening local content requirements and the Automotive Production
and Development Programme ("APDP"), is positive both for Metair and for the country.
Metair is fortunate that almost all its subsidiaries were awarded their respective product portfolio for the new vehicle,
namely head and tail lights, shock absorbers, wire harnesses, batteries, plastic parts and suspension control parts.
Metair's associate company Valeo SA secured the manufacture and supply of the HVAC (heat, ventilation and cooling module)
business and radiator business from Mercedes Benz for the planned production at much higher than current units in
East London from April 2021.
The launch of the new Nissan, VW and Isuzu models complete the range of new business secured by other group subsidiary
companies. Effective delivery on these launches will require close collaboration with our business partners and customers,
as well as capital expenditure and training. Metair is investing in additional training and capacity to offset the complexity,
frequency and intensity of the upcoming cycle. In costing these launches, we take a conservative view on forecast volumes to
ensure that we meet our minimum investment criteria even on lower volumes than forecast. We are also identifying more measured
ways to manage volume risk, including ensuring that value can be released from model-specific equipment should forecast volumes
not materialise.
Energy Storage Vertical
Mutlu Aku produced another strong in-country performance in the context of ongoing challenging global political and
trade conditions, delivering a 26.3% increase in turnover and 5.7% increase in local currency profitability on strong
aftermarket demand and good growth in exports. Export margins declined, however, due to a loss-making export contract.
The Turkish Lira was less volatile than during 2018 and averaged 8.8% weaker against the Rand over the period. In Rand terms
excluding once off insurance gains in 2018, Mutlu Aku reported a 5% increase in profitability.
Conditions in Romania were subdued and Rombat reported a 28.6% decline in Rand contribution to R77 million. Rombat
successfully completed Metair's first Li-ion cell manufacturing facility.
Despite low industrial demand, First National Battery produced a marginally improved result after considerable attention over
the last few years. The Energy Storage Vertical reported a growth in revenue of 7.4% to R6.9 billion, slightly decreased profit
by 3.6% to R666 million and sold 7.534 Gigawatt hours of our total installed capacity of 12.4 Gigawatt hours.
Outlook
In the Energy Storage Vertical our focus in the year ahead will be on finalising and optimising our potential value extraction
for shareholders under the new strategy.
The Metair Automotive Components Vertical enters a critical phase of investing into its future for the next 12 to 18 months as
we establish greenfield facilities to secure future growth while aiming to sustain our current performance,excluding any
extraordinary one-off project and/or event costs. Project management and containment of pre-production, preparation and launch
costs will be critical during this period.
South Africa's automotive industry has the opportunity to enter an exciting growth phase enabled by major trend shifts in the
industry and our specific market access position from South Africa. South Africa must protect its market access and government
needs to carefully consider its position regarding legislation like the Copyright Amendment Bill that will weaken our standing
in the protecting of intellectual property rights. This could bring about a review of the special access South Africa has into
the US under the generalised system of preferences (GSP) and Africa Growth and Opportunity Act (AGOA).
The automotive industry needs to remain diligent in its efforts to mitigate any potential negative long term effect due to the
COVID-19 ("Coronavirus").
Year to date trading has been challenging due to external factors like a labour disruption at a major customer, Eskom power
disruptions as well as initial customer and market volume declines. Markets could further be impacted by the fall out caused by
the Coronavirus.
Metair's management will have to remain flexible in the roles required to achieve these objectives.
FOR FURTHER INFORMATION
This short-form announcement is the reponsibility of the directors and is only a summary of the information in the full
announcement and does not contain full or complete details. Any investment decision should be based on the full announcement
accessible via the JSE link at (https://senspdf.jse.co.za/documents/2020/JSE/ISSE/MTA/AFS2019.pdf)
and also available on our website (http://www.metair.co.za/investors/results-centre/).
The audited consolidated financial statements, from which this summarised report is extracted, have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. Key audit matters relating to impairment assessment of
goodwill and indefinite life asset relating to Mutlu have have been addressed in the auditor's report, which is available on our
website (http://www.metair.co.za/investors/results-centre/).
The full announcement is also available at our registered office and our sponsor's office for inspection, at no charge, during
office hours. An investor and analyst audio webcast of the presentation will be broadcast on Wednesday, 18 March 2020 at 14h00 (SAST),
for further information refer to the full announcement.
REGISTRARS
Computershare Investor Services (Pty) Limited
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
SPONSOR
One Capital
INVESTOR RELATIONS
Instinctif Partners
EXECUTIVE DIRECTORS:
CT Loock (Managing)
S Douwenga (Finance)
INDEPENDENT NON-EXECUTIVE DIRECTORS:
SG Pretorius (Chairman)
TN Mgoduso
HG Motau
B Mawasha
CMD Flemming
S Sithole
MH Muell
NL Mkhondo
COMPANY SECRETARY:
SM Vermaak
Date: 18-03-2020 07:05:00
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