Transcript Document

Metair Investments Ltd
Results For The Year Ended 31 December 2006
March 2007
Agenda
 Welcome
 Overview of Metair
 Financial Review
 Industry Review
 Operational Review
 Introduction to First National Battery
 Strategic Review
 Prospects
Overview of Metair
 Listed on the main board of the JSE
 Registered in 1948
 Market capitalisation of approximately R1.8 billion
 Portfolio of companies manufacturing and distributing
products primarily to:
- OEM’s
- Replacement market
- Export market
 Variety of products
Overview of Metair
Metair Group Structure
Metair
Outside
investment
25%)
Smiths Manufacturing (Pty) Ltd
75%
Radiators Heaters Air-conditioners
Condensers Cooling fans Hoses and pipes
Smiths Electric Motors (Pty) Ltd
100%
Blower Motors
Smiths Plastics (Pty) Ltd
25%)
Outside
investment
51%)
Hesto Harnesses (Pty) Ltd
100%
Front end modules
Horns
Wheel trims
Metindustrial (Pty) Ltd
(First National Battery Division)
100%
Unitrade 745 (Pty) Ltd
100%
Automotive cable
75%
Metindustrial (Pty) Ltd
(Supreme Spring Division)
100%
Coil springs Leaf springs
Stabilisers Torsion bars
Wiring Harnesses
Valeo Systems
South Africa (Pty) Ltd
Headlights
Lamps
Plastic injection mouldings
100%
Batteries (includes non automotive)
Plastic injection mouldings
Outside
investment
Hella South Africa (Pty) Ltd
49%
Tenneco
25.1%
Automotive Holdings SA (Pty) Ltd
Shock absorbers
Struts
Track control arms
Outside
investment
(74.9%)
Overview of Metair
2006 financial results – Salient Features
 Group turnover increased by 23% to R2 642 million
(2005: R2 151 million)
 Attributable profit after tax increased by 28% to R203.2 million
(2005: R158.8 million)
 HEPS increased by 27% to 3317 cents (2005: 2603 cents)
 Dividend per share up to 1000 cents (2006: 850 cents)
 Sales of components to OEM’s up 20% to R1347.4 million
– 51% of group turnover
 Automotive division gained market share in replacement market
Overview of Metair
EPS
R
35
33.17
30
27.78
26.03
25
22.97
20
15.39
15
10
2002
2003
2004
2005
Compound growth – 21.2%
2006
Overview of Metair
DPS
R
12
10
10
8.5
8
8.5
7
6
4.5
5
4
2
0
2002
2003
2004
2005
2006
2007
Overview of Metair
Cash generated by operations before working capital
R’m
400
362
350
300
274
280
2004
2005
240
250
200
165
150
100
50
0
2002
2003
Compound growth – 21.7%
2006
Overview of Metair
ROE
Percentage
30%
25%
21%
21%
20%
20%
17%
16%
15%
10%
5%
0%
2002
2003
2004
2005
2006
Financial Review
Callie van der Merwe
Abridged group income statement
31 December 31 December
2006
2005
R’000
R’000
Revenue
Cost of sales
Gross profit
Other operating income
Distribution, administrative and other expenses
Operating profit
Interest income
Interest expense
Share of results of associates
Impairment of investment in associate company
Profit before taxation
Taxation
Profit for the year
Minority interest
Attributable to Equity holders of the Company
2,641,911
-2,050,455
591,456
30,142
-310,361
311,237
13,440
-6,846
7,100
0
324,931
-98,388
226,543
23,303
203,240
2,151,020
-1,692,776
458,244
50,698
-261,511
247,431
14,338
-10,104
3,236
-12,906
241,995
-70,540
171,455
12,656
158,799
Turnover analysis
2006
2005
9.2%
8.4%
20.2%
23.5%
51.1%
52.1%
19.3%
16.2%
Non-auto
Export
After Market
Original Equipment
Turnover Segmentation
Abridged group balance sheet
Assets
31 December
2006
R’000
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investment in associates
Defined benefit asset
Deferred taxation
Other non-current assets
Current assets
Inventory
Accounts receivable
Cash
Financial assets at fair value
Total assets
696,931
614,087
14,647
19,548
1,640
10,759
36,250
836,316
423,007
345,499
67,810
0
1,533,247
31 December
2005
R’000
576,137
502,118
11,676
18,249
9,094
35,000
792,889
309,486
248,428
139,011
95,964
1,369,026
Abridged group balance sheet
Equity and liabilities
31 December
2006
R’000
31 December
2005
R’000
Share capital and premium
Share-based payment reserve
Treasury shares
Non-distributable reserves
Retained earnings
Ordinary shareholders equity
Minority interest
Total equity
40,555
2,551
-101,508
16,755
1,039,954
998,307
79,055
1,077,362
36,414
1,831
-459
12,389
893,084
943,259
43,651
986,910
Non-current liabilities
Interest bearing borrowings
Post-employment medical benefits
Deferred taxation
Current liabilities
Trade and other payables
Borrowings
Taxation
Provisions for liabilities and charges
Bank overdrafts
Total liabilities
Total equity and liabilities
89,077
5,069
15,228
68,780
366,808
299,335
13,052
9,092
15,569
29,760
455,885
1,533,247
126,138
53,252
14,681
58,205
255,978
210,875
15,829
9,687
13,154
6,433
382,116
1,369,026
Cash flow statement
Operating activities
Profit before taxation
Non-cash items
Working capital changes
Cash generated from operations
Finance charges
Investment income
Taxation paid
Dividends paid
Dividend income from associate
Net cash inflow from
operating activities
Investing activities
Proceeds on disposal of interest in subsidiary
Net cash used in other investing activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
At beginning of the year
Cash and cash equivalents at end of year
31 December
2006
R’000
31 December
2005
R’000
324,931
37,247
-119,915
242,263
-6,846
13,440
-89,857
-57,055
241,995
38,857
-77,492
203,360
-10,104
14,338
-74,434
-51,071
416
0
102,361
82,089
20,080
-165,065
-144,985
-147,868
-190,492
228,542
38,050
47,000
-116,336
-69,336
-14,645
-1,892
230,434
228,542
Financial management
 Each subsidiary is run on an autonomous basis with broad guide
lines set by group
 Annual financial directors conferences are held where global
parameters are agreed for budgeting purposes as well as financial
parameters developed and group standards set
 Strict criteria in place for capital investments
-
Projects must achieve an IRR of 18% over 5 years
Plant and machinery is amortised over the same period
Assumption is that working capital is realised in the 6th year
The ROA to render 22% within a reasonable period when capacity is reached.
 Contracts with OEM’s include pricing adjustments for:
- Currency movements
- Commodity price movements
- Negotiated movement in operational expenses
 100% of capital imports are covered forward at the time of signing
the capital request
 50% of net component import exposures are covered forward
Industry Review
Theo Loock
South African vehicle market growth
2000
Total vehicle sales
2001
2002
2003
2004
2005
2006
F 2007
(including non-NAAMSA & excluding exports)
Units
354 632
382 529
363 184
382 600
481 520
617 450
714 340
771 000
–
7.9%
-5.1%
5.3%
25.9%
28.2%
15.7%
7.9%
68 031
108 293
125 306
126 661
110 507
139 912
179 854
220 000
–
59.2%
15.7%
1.1%
-12.8%
26.6%
28.5%
22.3%
356 250
406 149
404 441
421 335
455 052
525 271
614 000
682 000
Growth
–
14.0%
-0.4%
4.2%
8.0%
15.4%
16.9%
11.0%
GDP %
3.5%
2.7%
3.7%
3.1%
4.5%
5.1%
4.6%
4.1%
Growth
Total exports
Units
Growth
Total domestic production
Units
F = forecast
Source: NAAMSA; Economist Intelligence Unit; Business Monitor International (BMI)
Total local passenger vehicle
sales – units
000's
600
500
514
482
420
400
328
300
273
256
268
252
235
200
210
234
258
242
214
198
184
195
192
100
0
'90
'92
'94
'96
'98
'00
'02
'04
'06
Source: NAAMSA
Total vehicle production and Exports – units
40%
900,000
800,000
27
614,000
27
455,052
110,507
220,000
421,335
126,661
125,306
108,293
300,000
200,000
250000
270000
100,000
235000
68,031
25,896
19,569
3
11,553
15,764
5
4
59,716
8
404,441
406,149
356,250
326,065
312,055
362,104
386,311
389,476
10%
600,000
400,000
179,854
19
18
700,000
500,000
139,912
20%
33
525,271
24
759000
29
720000
30
682,000
31
30%
33
807000
33
32
08 (P ro j)
09 (P ro j)
10 (P ro j)
0%
0
'95
'96
'97
'98
'99
'00
'01
Total vehicle production - units
'02
'03
'04
'05
'06
Total vehicle exports - units
07 (P ro j)
%Exports
Source: NAAMSA
South African new vehicle sales forecast
382,600
363,184
354,632
300,000
382,529
400,000
914,881
837,986
847,000
765,143
710,900
771,000
481,520
500,000
658,278
617,450
600,000
646,200
700,000
714,340
800,000
810,000
900,000
895,000
1,000,000
200,000
100,000
0
2000
2001
2002
2003
2004
Actual
NAAMSA
BMI
2005
2006
NAAMSA
BMI
original original
2006
2006
forecast forecast
Forecast
2007
2008
2009
2010
Source: NAAMSA; BMI
Operational Review
Theo Loock
Operational Review
 Domestic production increased to 587 719 vehicles in 2006
compared to 525 227 in 2005
 Focus on continuous improvement programmes and Japanese
Production Systems
 Business model with JV partners is to achieve globally
benchmarked production, delivery and quality standards
 Headcount increased to 5 697 from 5 186
 Smith Plastics received the Supplier Recognition Award
Capital expenditure
 Capex over the past 3 years was as follows:
- 2006: R166 million
- 2005: R112 million
- 2004: R108 million
 2007 Capex is budgeted at R90 million – a significant portion will
be invested in increased capacity at First National Batteries for
non-automotive and automotive aftermarket products
The businesses have invested sufficient capital to
cope with the growth in production expected
in 2008 and 2009
First National Battery
Louis Laubscher
6 Buxton Street, East London
1931
2006
4 Dedicated Manufacturing Sites
Settlers Way, East London : 9 200m2 Factory
AUTOMOTIVE BATTERY MANUFACTURING
8000 Batteries per day
also Technical Centre
Buffalo View Road, East London : 6 000m2 Factory
INDUSTRIAL BATTERY MANUFACTURING
Forktruck Batteries : Standby Batteries : Mining Batteries
Fort Jackson : 3 800m2 Factory
PLASTIC INJECTION MOULDING
50 Ton – 860 Ton Injection Moulding Machines 20 Million Pieces per annum
also Toolroom
Liverpool Road, Benoni
LEAD SMELTER
10 000 Tons Recycled Lead per annum
also Warehousing & Distribution : Formation & Finishing Line : Marketing & Finance Divisions
East London Automotive Battery Factory
East London Automotive Battery Factory
The First Speedshift Automotive
Battery Production Line on the African Continent
East London Industrial Battery Factory
Spine Caster
Tube Filling
Computerised Acid Mixing
Oxide Mill
Fort Jackson
Plastics Processing Plant
850 Ton Nissei Injection
Moulding Machine
Tool Design with Autocad
2d and 3d
Interior view of Fort Jackson
Battery Lid Tool
Pb
Battery Breaker
Rotary Furnace
Source of feedstock for lead smelter
and polypropylene scrap for recycling
capable of producing
lead alloys of the highest quality
Market Segments
Industrial
Automotive
Export
Standby
Franchise
Mining
Original Equipment
Materials Handling
Solar
Replacement
Strategic Review & Prospects
Theo Loock
Strategic Review
 Wesco exits to Coronation Capital and Royal Bafokeng Holdings
 Stronger focus on activating balance sheet
 Exciting growth platform – well placed to be industry catalyst
 Experienced management team
 Growth strategy – organic and acquisitive
 Investment criteria
Prospects – Industry
 The overall prospects remain positive for 2007 on the back of
continued GDP growth
 Industry production expected to expand to 662 000 vehicles during
2007 benefiting from export growth
 Two high volume locally produced vehicles will run out in 2007 and
new replacement models will be launched
 The labour environment is predicted to be challenging in 2007
Prospects - Metair
 2007 will be a challenging year compared to 2006, before picking
up in 2008
 Industry is awaiting Government’s announcement in regard to the
continuation of the Motor Industry Development Programme
 The exchange rate remains an important factor
 Continue to pursue opportunities in the South African automotive
component manufacturing sector