National Tyre Services Limited is a company incorporated in Zimba...
of 1

National Tyre Services Ltd FY 2014 financial results

National Tyre Services Ltd Listed on the Zimbabwe Stock Exchange has released its Full Year Results. Check out Insights into this company in their presentation which appears below. Sign up to the to receive earnings presentations of all listed companies in Africa by email
Published on: Mar 3, 2016
Published in: Investor Relations      

Transcripts - National Tyre Services Ltd FY 2014 financial results

  • 1. NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION National Tyre Services Limited is a company incorporated in Zimbabwe. Its activities include the reprocessing and retailing of tyres and related services. 2. STATEMENT OF COMPLIANCE The company's financial statements have been prepared in accordance with international Financial Reporting Standards (IFRS) and the International Financial Reporting Interpretations Committee (IFRIC) interpretations. They are also prepared in accordance with the Companies Act (Chapter 24.03) and relevant statutory instruments (SI 33/99 and SI 62/96). The financial statements are based on statutory records that are maintained under the historical convention as modified by the valuation of certain assets. Historical cost is generally based on the fair value of consideration given in exchange for assets. The company's external auditors, Deloitte & Touche, have issued their opinion on the company's financial statements for the year ended 31 March 2014. The audit was performed in accordance with International Standards on Auditing. They have issued an unqualified audit opinion. These condensed results have been derived from the company's annual financial statements and are consistent in all material respects with the company's financial statements. A copy of the external audit report is available for inspection at the company's registered office. Any reference to future financial performance and operational information included in this announcement has not been audited or reported on by the company's external auditors. 3. CURRENCY OF REPORTING The financial statements are presented in United States Dollars which is the functional currency of the company. 4. ACCOUNTING POLICIES Accounting policies and methods of measurement are consistent in all material respects with those used in the prior year and with the requirements of International Financial Reporting Standards applicable for the year ended 31 March 2014. MARCH 2014 MARCH 2013 US$ US$ 5. REVENUE SEGMENTATION Revenue from the sale of goods 15,308,367 17,192,152 Revenue from the provision of services 410,079 386,032 15,718,446 17,578,184 6. PROFIT BEFORE TAXATION Profit for the year has been arrived at after charging/ (crediting): Current year audit fees and expenses 36,500 36,000 Depreciation of property, plant and equipment and investment property 260,660 246,435 Assets written off 14,474 - Transport charges 191,979 242,339 Technical fees 321,042 357,714 Electricity and lighting 109,326 139,401 Motor vehicle fuel expenses 130,386 133,525 Rental income (211,895) (190,523) Deferred income recognized on rentals (60,000) (60,000) Profit on disposal of property,plant and equipment and investment property (66,905) (32,861) Employee costs 2,167,087 2,097,564 Fees for services as Directors 10,500 8,541 7. TAXATION Current tax expenses 207,369 320,291 Capital gains tax 5,000 - Deferred tax credit relating to the origination and reversal of temporary differences (56,156) (10,312) 156,213 309,979 MARCH 2014 MARCH 2013 US$ US$ 8. RELATED PARTY TRANSACTIONS AND BALANCES Trading transactions: Apollo Tyres Zimbabwe - Purchases 2,272,590 3,112,432 Apollo Tyres South Africa (Pty) Ltd - Purchases 3,259,504 5,516,237 Apollo Tyres Zimbabwe - Sales 4,412 - Apollo Tyres South Africa (Pty) Ltd-Technical fees 223,189 351,562 Apollo Durban (Pty) Ltd - Technical fees 91,253 - Balances: Apollo Tyres Zimbabwe - purchases 171,381 135,209 Apollo Tyres South Africa (Pty) Ltd - Purchases - 505,833 Apollo Durban (Pty) Ltd-Technical fees 91,253 - Apollo Tyres South Africa (Pty) Ltd - Technical fees 53,412 182,061 9. PROPERTY, PLANT AND EQUIPMENT Movement in the property, plant and equipment balance for the year: Balance at the beginning of the year 2,822,782 2,941,407 Capital expenditure 186,753 109,686 Depreciation (237,896) (223,397) Write off (14,474) - Disposals (7,107) (4,914) 2,750,058 2,822,782) 10. INVENTORIES Raw materials 407,253 419,421 Finished goods 1,539,579 1,831,135 Consumable stores 117,299 132,328 2,064,131 2,382,884 11. TRADE AND OTHER PAYABLES Trade and other payable 1,459,381 1,425,412 Provisions 118,850 124,356 1,578,231 1,549,768 12. COMMITMENTS OF CAPITAL EXPENDITURE Capital commitments authorized but not contracted 200,048 500,010 13. EVENT AFTER REPORTING DATE There have been no significant events after the Statement of Financial Position date. 14. GOING CONCERN The Directors have assessed the company's ability to continue operating as a going concern for the foreseeable future and the financial statements have accordingly been prepared on the going concern basis. 15. DIRECTORS' RESPONSIBILITY The Directors are responsible for the preparation of financial statements for each reporting period, that give a true and fair view of the state of affairs of the company. COMMENTARY ENVIRONMENT Economic growth declined relative to prior year and by the end of the period under review, inflation was at (0.92%) as aggregate demand slowed down reflecting the deteriorating liquidity constraints on the economy. The increase in non-performing loans as consumers became over borrowed, decline in industrial capacity utilization resulting in company closures and increased retrenchments led to a tough trading environment. This was worsened by the on going liquidity crunch as most companies had to balance sales turnover with the need for cash generation. The growth in the national fleet and fuel consumption were positive for the industry. Industry rivalry intensified with an increase in the number of formal and informal tyre dealers and retreaders notwithstanding company closures in the same industry. OPERATIONS REVIEW Financial Performance Despite a strong start in the first quarter which was in line with budget, revenue ended the year at 11% down on the prior year due to the effects of the overall trading environment and a stronger emphasis on working capital reduction in order to mitigate financial risk. Margins were squeezed as price influenced purchasing decisions across all market segments within a crowded market. The strategic cost management and productivity enhancement initiatives implemented resulted in overheads being maintained at same levels as prior year. Reflecting the revenue performance, thin margins and provisions for bad debts, profit before tax was 60% below prior year. Retail & Services Unit sales of new tyres declined by 9% compared to prior year. Focused promotional activities in the second half of the year in response to changing market trends helped to mitigate further decline. Retreading Unit sales of retreads grew by 3% over prior year. Growth is being hampered by a shortage of good quality casings resulting from the market's preference for cheap and lower quality new truck tyres. Lobby efforts for bona fide retreaders to be allowed to import good quality casings are ongoing through industry associations. Penetration into the mining sector benefited the re-lugging factory. SUSTAINABILITY The Company continued to take an active role in supporting road safety in partnership with stakeholders. In line with its commitment to the environment, the Company's Environmental Management System's certification to ZWS ISO 14001:2004 was maintained. DIRECTORATE Mr. Riaz Haffejee, who was chairman of the Board of Directors resigned from the Board on 28 November 2013. Mr. Manish Bhatia was appointed Chairman with effect from 29 November 2013. We thank Mr. Haffejee for his contribution. DIVIDEND In light of the current liquidity conditions, it is considered prudent to conserve cash hence the Directors' decision not to declare a dividend. OUTLOOK The Company has put in place strategies to grow revenue and market share. A new distribution model is being aggressively rolled out and is meant to provide a suitable route to market thus giving access to new markets and empowering small operators to graduate into the mainstream tyre industry. Marketing efforts will also focus on customer retention and rehabilitation and product range expansion. APPRECIATION We record our thanks and appreciation to employees, customers, suppliers, various advisers and our colleagues on the Board for their positive contribution to the Company during the year under review. M. Bhatia Chairman 18 June 2014 DIRECTORS: M. Bhatia (Chairman) #, K. Mandevani (Group Managing Director), T.P. Choto (Chief Operating Officer), S.N. Mandimika, T.C. Mazingi #, B.V. Mancama # # Non-Executive REVENUE FOR THE YEAR TO 31 MARCH 2014 US$15,718,446 REVENUE FOR THE YEAR TO 31 MARCH 2013 US$17,578,184 CHANGE IN REVENUE -11% PBT FOR THE YEAR TO 31 MARCH 2014 US$477,017 PBT FOR THE YEAR TO 31 MARCH 2013 US$1,185,716 CHANGE IN PBT -60% BASIC EPS (CENTS) - MARCH 2014 0.13 BASIC EPS (CENTS) - MARCH 2013 0.34 CHANGE IN EPS -62% HIGHLIGHTS ABRIDGED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 NATIONAL TYRE SERVICES LIMITED ABRIDGED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME MARCH 2014 MARCH 2013 US$ US$ Revenue 15,718,446 17,578,184 Operating profit 92,999 891,567 Other income 379,372 292,831 Finance income 4,646 1,318 Profit before tax 477,017 1,185,716 Income tax expense (156,213) (309,979) Profit attributable to shareholders 320,804 875,737 Other comprehensive income/(loss) 1,338 (1,762) Total comprehensive income for the year 322,142 873,975 Number of shares in issue (thousands) 253,872 253,872 Weighted average number of shares (thousands) 253,872 253,872 Basic earnings per share (cents) 0.13 0.34 Diluted earnings per share (cents) 0.13 0.34 ABRIDGED STATEMENT OF FINANCIAL POSITION MARCH 2014 MARCH 2013 US$ US$ ASSETS Non-current assets 3,933,651 4,053,705 Property, plant and equipment 2,750,058 2,822,782 Investment property 1,107,849 1,156,587 Available for sale investments 75,744 74,336 Current assets 4,698,186 4,320,569 Total assets 8,631,837 8,374,274 EQUITY AND LIABILITIES Shareholders' equity 6,204,466 5,882,324 Deferred income - 25,000 Deferred tax 801,096 857,182 Current liabilities 1,626,275 1,609,768 Total equity and liabilities 8,631,837 8,374,274 ABRIDGED STATEMENT OF CASH FLOWS MARCH 2014 MARCH 2013 US$ US$ Cash flows from operating activities before changes in working capital 620,600 1,337,972 Changes in working capital 344,625 (874,435) Tax paid (185,462) (399,696) Net cash generated from operating activities 779,763 63,841 Net cash movement for the period 697,642 (6,752) Opening balance - cash and cash equivalents 517,495 524,247 Closing balance - cash and cash equivalents 1,215,137 517,495 CONDENSED STATEMENT OF CHANGES IN EQUITY MARCH 2014 MARCH 2013 US$ US$ Opening balance 5,882,324 5,008,349 Profit for the period 320,804 875,737 Other comprehensive income/(loss) 1,338 (1,762) Closing balance 6,204,466 5,882,324

Related Documents