ION Transmissions. The ION Transmissions business unit is responsible for manufacturing and developing transmissions. It is in the process of both updating and diversifying its product range. ION Transmissions’ operations are stable and operating smoothly. Since the Administrators’ appointment, production has continued without interruption, notwithstanding the very large number of suppliers involved. Production volumes have been slightly ahead of schedule, thanks to the efforts of its employees. Aggressive profit improvement reviews at this site were not necessary prior to a sale because it was already running well and a redundancy programme was effected in November 2004 so as to re-align factory resources with current demand. ION Transmissions’ volumes fell significantly in 2004 as a consequence of the following: ▪ loss of volume to customers in North Asia, which is mainly attributed to reduced vehicle model sales in Korea; and ▪ a decline in the volume of 4 speed transmissions sold to Ford as this transmission model approaches the end of its life (2008). The Administrators continue to support the completion of the new 6 speed transmission that ION Transmissions has developed. The research and development facility continues to operate normally, and discussions with prospective Asian buyers of this product are continuing. Since the Administrators’ appointment, Ford confirmed that it will not be a customer for ION Transmissions’ 6 speed transmission. We have confirmed that Ford advised the ION Administration Group to this effect in September 2004, which is further discussed in section 10 of this report. The Administrators are investigating this matter to ascertain whether it should have been disclosed to shareholders and/or financiers at that time. At the time of the Administrators’ appointment, ION Transmissions had commenced building a production line for rear axle differentials however this project will not be completed as a result of Xxxxxx’x decision not to proceed. Holden has since advised that the supply arrangement will be taken over by ZF Australia Pacific Pty Ltd. The ION Transmissions business unit continues to trade cashflow positively due to a positive EBITDA contribution and the moratorium on pre-appointment debts afforded under the Act by the Administrators’ appointment. Sales achieved by the ION Transmissions business unit during the reported period are consistent with the Administrators’ expectations, despite reductions in Ford volumes. The Administrators ant...
ION Transmissions. ION Transmissions Statement of Financial Performance 2002 2003 2004 YTD 30 Nov 04 $m $m $m $m Sales Revenue 255.9 337.5 299.1 98.1 ACIS Revenue 8.1 14.2 13.7 5.2 EBITDA 52.7 66.8 67.5 4.2 EBIT 38.1 51.9 53.0 (2.3) Capital Expenditure 15.0 36.9 13.0 7.2 The key drivers of ION Transmissions’ financial performance are sales volume and the ability to continually achieve productivity improvements. Over the past 3 years, ION Transmissions has recorded strong earnings results based on supply arrangements with Ford and SsangYong, and the successful implementation of various cost reduction initiatives focussed on reducing waste and overheads. Significant capital expenditure was also invested during 2003 to increase plant capacity. The results of ION Transmissions for the 5 months to 30 November 2004 were impacted by a loss of volume from major customers. Redundancy costs of $6.6 million were also incurred by ION Transmissions in November 2004 in response to the fall in customer demand. Further comments regarding the operations of ION Transmissions can be found at section 6.3.3. Xxxxxxxxx Xxxxxxxxx Statement of Financial Performance 2002 2003 2004 YTD 30 Nov 04 $m $m $m $m Sales Revenue N/A N/A 3.1 11.9 EBITDA N/A N/A (36.1) (16.0) EBIT N/A N/A (36.1) (16.9) Capital Expenditure N/A 28.8 34.6 4.5 Production at the Xxxxxxxxx facility commenced in May 2004, with the manufacture of Proton Cylinder heads and Holden oil pans. Until July 2004, Xxxxxxxxx trading results were capitalised and reflected within the North Plympton accounts. Significant expense items of $36.1 million incurred in 2004 include: ▪ the write off of pre-production and commissioning losses ($16.1 million); ▪ the write-off of research and development costs ($8.5 million); and ▪ asset write downs ($11.5 million). Losses for the 5 months to 30 November 2004 of $16.9 million were attributable to poor plant design and production technology, high reject rates and ongoing production problems. Wingfield’s many production problems have prevented a sale of the plant as a going concern, necessitating the planned closure of the facility in July 2005. Further comments regarding the operations of Xxxxxxxxx can be found at section 6.3.5.
