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.
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Published on: Mar 3, 2016
Transcripts - National Tyre Services Ltd FY 2014 financial results
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
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
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
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)
MARCH 2014 MARCH 2013
8. RELATED PARTY TRANSACTIONS AND BALANCES
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 -
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)
Raw materials 407,253 419,421
Finished goods 1,539,579 1,831,135
Consumable stores 117,299 132,328
11. TRADE AND OTHER PAYABLES
Trade and other payable 1,459,381 1,425,412
Provisions 118,850 124,356
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.
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.
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
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.
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.
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.
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.
In light of the current liquidity conditions, it is considered prudent to conserve cash hence the Directors' decision not
to declare a dividend.
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.
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.
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 #
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%
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
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
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
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
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