ABC MOTORS COMPANY LIMITED
ANNUAL REPORT: 2013-06-30
DIRECTORS’ REPORT
Dear Shareholders,
The financial year 2012/2013 has been a tough year for ABC Motors Company Limited Operating in an industry that is directly affected by the worldwide economy has been one of the greatest challenges over the last few years. While there were signs of recovery as shown by the latest figures of the tourism industry, Mauritius is still struggling and there does not seem to be a big change with a prospective growth rate of 3.5% for 2013 compared to 3.3% for 2012.
The automobile industry worldwide seems to see the light at the end of the tunnel following statements of car industry leaders at the recent Frankfurt Motor Show but we are not there yet.
In Mauritius, the sales of new cars in 2013 dropped significantly as compared to 2012. The Group achieved an overall turnover of Rs.1.29 billion (2012: Rs.l.45 billion) and profit before tax for the year reached Rs.38.3 million (2012: Rs.61.8 million).
The year-to-year fall in profitability can be illustrated by a drop in the sales of Nissan and UD vehicles which reached 1.314 units for the financial year as compared to 1,366 units for some period in 2012. The drop resulted essentially from UD vehicles sales which stood only of 37 units for this year as compared to 124 units for last year, out of which 87 units related to tender sales.
Moreover, we did not see the benefits of the depreciating Yen until the second half of the year and the
Nissan Sentra which is going to be our volume seller was delayed in its launch.
Nevertheless we have been resilient and our aftersales division (workshop and spore ports) hove both shown some promising results, showing a definite shift in strategy to improve our aftersales. After all. our aftersales service has always been the dominant key to our success.
During the year the Group invested massively in the construction of the ABC Car Gallery, the Porsche Centre and a new Service Centre at Phoenix. Total amount spent at the reporting date on this project stood at Rs.137 million (2012: Rs33 million} The financing of the construction has been structured in such a way to secure a reasonable debt-equity ratio and comfort both for the present and future liquidity requirements of the Group's operations and investment. Indeed, the project was partly financed by the Group's 01vn funds and partly by a long term loan of Rs.96.3 million repayable over 15 years.
Despite the above increase in the Group's borrowings, the Group has enjoyed o commendable reduction in finance costs for the year to stand at Rs.12 .S million (2012: Rs.21.4 million) and net debt to equity ratio of 0.85 (2012: 0.64) which is still well below the parameters set by the Group's main bankers.
At 30 June 2013 the Group's net asset value per share stood at Rs.71.28 (2012 Rs68 06) and its share price on the Stock Exchange of Mauritius was Rs.140.00 (2012: Rs.39.50).
Future Outlook
2013/2014 will be a much more exciting year for ABC Motors Company limited. We will be opening the ABC Car Gallery and Service Centre next to our Porsche Centre in Phoenix that will be displaying all our Nissan model line-up together with the other brands that we commercialise This new branch will revive our position and footprint in the Plaines Wilhems' district, offering a new choice of sales and aftersales to the Mauritian public and to our existing customers.
The continued depreciation of the Japanese Yen will benefit us in maintaining our competitiveness against the Koreans and we are impatiently waiting for the launch of 2 new SUV models during the course of the year.
We believe that the continuous innovation in our service and products will supplement the experience and satisfaction of the demand and subsequently present new opportunities for growth and sustainability for ABC Motors Company Limited.
On behalf of the Board of Directors and the executive management, I wish to show our appreciation to the staff for their continuous dedication and hard work during the year. In addition. I would like to extend my thanks to the customers for their loyalty as they are also our greatest inspiration.
Dean Ah Chuen
Executive Director
26 September 2013