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Metair Investments Ltd

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.

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Metair Investments Ltd

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  1. Metair Investments Ltd Results For The Year Ended 31 December 2006March 2007

  2. Agenda • Welcome • Overview of Metair • Financial Review • Industry Review • Operational Review • Introduction to First National Battery • Strategic Review • Prospects

  3. 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

  4. Overview of MetairMetair Group Structure Metair Smiths Manufacturing (Pty) Ltd 75% Hella South Africa (Pty) Ltd 100% Outside investment 25%) Radiators Heaters Air-conditioners Condensers Cooling fans Hoses and pipes Headlights Lamps Horns Plastic injection mouldings Wheel trims Smiths Electric Motors (Pty) Ltd 100% Metindustrial (Pty) Ltd (First National Battery Division) 100% Blower Motors Batteries (includes non automotive) Smiths Plastics (Pty) Ltd 100% Unitrade 745 (Pty) Ltd 100% Plastic injection mouldings Automotive cable Hesto Harnesses (Pty) Ltd 75% 100% Metindustrial (Pty) Ltd (Supreme Spring Division) Outside investment 25%) Wiring Harnesses Coil springs Leaf springs Stabilisers Torsion bars Tenneco Automotive Holdings SA (Pty) Ltd 25.1% Valeo Systems South Africa (Pty) Ltd 49% Outside investment 51%) Outside investment (74.9%) Front end modules Shock absorbers Struts Track control arms

  5. 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

  6. Overview of Metair EPS R Compound growth – 21.2%

  7. Overview of MetairDPS R

  8. Overview of MetairCash generated by operations before working capital R’m Compound growth – 21.7%

  9. Overview of Metair ROE Percentage

  10. Financial Review Callie van der Merwe

  11. 31 December 31 December 2006 2005 R’000 R’000 Revenue 2,641,911 2,151,020 Cost of sales -2,050,455 -1,692,776 Gross profit 591,456 458,244 Other operating income 30,142 50,698 Distribution, administrative and other expenses -310,361 -261,511 Operating profit 311,237 247,431 Interest income 13,440 14,338 Interest expense -6,846 -10,104 Share of results of associates 7,100 3,236 Impairment of investment in associate company 0 -12,906 Profit before taxation 324,931 241,995 Taxation -98,388 -70,540 Profit for the year 226,543 171,455 Minority interest 23,303 12,656 Attributable to Equity holders of the Company 203,240 158,799 Abridged group income statement

  12. Turnover analysis 2006 2005 Turnover Segmentation

  13. 31 December 31 December 2006 2005 R’000 R’000 ASSETS Non-current assets 696,931 576,137 Property, plant and equipment 614,087 502,118 Intangible assets 14,647 11,676 Investment in associates 19,548 18,249 Defined benefit asset 1,640 Deferred taxation 10,759 9,094 Other non-current assets 36,250 35,000 Current assets 836,316 792,889 Inventory 423,007 309,486 Accounts receivable 345,499 248,428 Cash 67,810 139,011 Financial assets at fair value 0 95,964 Total assets 1,533,247 1,369,026 Abridged group balance sheet Assets

  14. 31 December 31 December 2006 2005 R’000 R’000 Share capital and premium 40,555 36,414 Share-based payment reserve 2,551 1,831 Treasury shares -101,508 -459 Non-distributable reserves 16,755 12,389 Retained earnings 1,039,954 893,084 Ordinary shareholders equity 998,307 943,259 Minority interest 79,055 43,651 Total equity 1,077,362 986,910 Non-current liabilities 89,077 126,138 Interest bearing borrowings 5,069 53,252 Post-employment medical benefits 15,228 14,681 Deferred taxation 68,780 58,205 Current liabilities 366,808 255,978 Trade and other payables 299,335 210,875 Borrowings 13,052 15,829 Taxation 9,092 9,687 Provisions for liabilities and charges 15,569 13,154 Bank overdrafts 29,760 6,433 Total liabilities 455,885 382,116 Total equity and liabilities 1,533,247 1,369,026 Abridged group balance sheet Equity and liabilities

  15. Cash flow statement 31 December 31 December 2006 2005 R’000 R’000 Operating activities Profit before taxation 324,931 241,995 Non-cash items 37,247 38,857 Working capital changes -119,915 -77,492 Cash generated from operations 242,263 203,360 Finance charges -6,846 -10,104 Investment income 13,440 14,338 Taxation paid -89,857 -74,434 Dividends paid -57,055 -51,071 Dividend income from associate 416 0 Net cash inflow from operating activities 102,361 82,089 Investing activities Proceeds on disposal of interest in subsidiary 20,080 47,000 Net cash used in other investing activities -165,065 -116,336 Net cash outflow from investing activities -144,985 -69,336 Net cash outflow from financing activities -147,868 -14,645 Net decrease in cash and cash equivalents -190,492 -1,892 At beginning of the year 228,542 230,434 Cash and cash equivalents at end of year 38,050 228,542

  16. 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

  17. Industry Review Theo Loock

  18. South African vehicle market growth F = forecast Source: NAAMSA; Economist Intelligence Unit; Business Monitor International (BMI)

  19. Total local passenger vehicle sales – units Source: NAAMSA

  20. Total vehicle production and Exports – units Source: NAAMSA

  21. South African new vehicle sales forecast Actual Forecast Source: NAAMSA; BMI

  22. Operational Review Theo Loock

  23. 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

  24. 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

  25. First National Battery Louis Laubscher

  26. 6 Buxton Street, East London 1931 2006

  27. 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

  28. East London Automotive Battery Factory

  29. East London Automotive Battery Factory The First Speedshift Automotive Battery Production Line on the African Continent

  30. East London Industrial Battery Factory Spine Caster Computerised Acid Mixing Oxide Mill Tube Filling

  31. Fort JacksonPlastics Processing Plant 850 Ton Nissei Injection Moulding Machine Tool Design with Autocad 2d and 3d Battery Lid Tool Interior view of Fort Jackson

  32. 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

  33. Market Segments Industrial Automotive Export Standby Franchise Mining Original Equipment Materials Handling Replacement Solar

  34. Strategic Review & Prospects Theo Loock

  35. 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

  36. 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

  37. 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

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