| Wed 18 Apr 2007, 10:29 | | CMH - Combined Motor Holdings Limited - Reviewed r |
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CMH
CMH
CMH - Combined Motor Holdings Limited - Reviewed results for the year ended 28
February 2007
Combined Motor Holdings Limited
(Registration number 1965/000270/06)
(Share code: CMH & ISIN: ZAE000088050)
("the Company" or "the Group")
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007
34% increase in profit from operations
23% increase in normalised earnings per share
12% increase in earnings per share
21% increase in final dividend
Special dividend of 140 cents per share paid in March 2007
See press release for graph
GROUP FINANCIAL HIGHLIGHTS
Reviewed Audited
Change 28 February 28 February
% 2007 2006
Revenue (R`000) 34 9 085 649 6 756 951
Profit from operations(R`000) 34 339 757 252 711
Weighted average
number of shares in
issue (`000) 1 105 867 105 055
Number of shares for
dilution
calculation (`000) - 109 104 109 345
Earnings per share (cents) 12 175,4 157,2
Diluted earnings per
share (cents) 13 170,2 151,0
Headline earnings per
share (cents) 12 174,0 155,1
Diluted headline
earnings
per share (cents) 13 168,8 149,0
Normalised earnings
per share (cents) 23 193,1 157,2
Normalised headline
earnings
per share (cents) 24 191,7 155,1
Final dividend
per share (cents) 21 51,0 42,0
Total assets (R`000) 34 2 371 165 1 766 828
ABRIDGED GROUP INCOME STATEMENT
Reviewed Audited
28 February 28 February
Change 2007 2006
% R`000 R`000
Revenue 34 9 085 649 6 756 951
Cost of sales 35 (7 718 177) (5 728 309)
Gross profit 33 1 367 472 1 028 642
Selling and administration expenses 32 (1 027 715) (775 931)
Profit from operations 34 339 757 252 711
Finance costs 152 (32 082) (12 731)
Profit before taxation 28 307 675 239 980
Taxation 54 (113 997) (73 870)
Profit for the year 17 193 678 166 110
Attributable to:
Equity holders of the Company 185 683 165 157
Minority interest 7 995 953
193 678 166 110
Reconciliation of normalised earnings
Net profit attributable to equity
holders 185 683 165 157
Secondary taxation on companies
relating to special dividend 18 732 -
Normalised earnings 24 204 415 165 157
Reconciliation of headline earnings
Net profit attributable to equity
holders 185 683 165 157
Non-trading items
- capital profit on sale of business (1 666) (2 565)
less: capital gains tax 193 363
(1 473) (2 202)
Headline earnings 13 184 210 162 955
ABRIDGED GROUP CASH FLOW STATEMENT
Reviewed Audited
28 February 28 February
2007 2006
R`000 R`000
Cash flow from operating activities 60 778 116 109
Cash flow from investing activities (157 789) (263 391)
Cash flow from financing activities 293 590 (1 675)
Net cash flow for year 196 579 (148 957)
Cash and cash equivalents
at beginning of year 133 934 282 891
Cash and cash equivalents at end of year 330 513 133 934
ABRIDGED GROUP BALANCE SHEET
Reviewed Audited
28 February 28 February
2007 2006
R`000 R`000
Assets
Non-current assets
Plant and equipment 69 441 57 621
Goodwill 154 574 153 174
Investments 106 001 1 082
Deferred taxation 32 296 27 614
362 312 239 491
Current assets 2 008 853 1 527 337
Total assets 2 371 165 1 766 828
Equity and liabilities
Capital and reserves
Share capital and reserves 438 089 477 141
Minority interest 12 217 1 289
Total equity 450 306 478 430
Non-current liabilities
Interest-bearing borrowings 7 092 -
Advance from minority shareholders 269 953 4 668
Life assurance funds 37 669 32 639
Lease liabilities 63 491 44 099
378 205 81 406
Current liabilities 1 542 654 1 206 992
Total equity and liabilities 2 371 165 1 766 828
Net asset value per share (cents) 421 453
GROUP STATEMENT OF CHANGES IN EQUITY
Non- Share-
distributable based Retained
Share capital reserve payment earnings
reserve
R`000 R`000 R`000 R`000
At 28 February
2005 12 394 5 896 682 327 879
Issue of shares 2 081
Net profit for
year 165 157
Dividend paid (38 586)
Share-based
payment reserve 1 638
Purchase of
minority interest
Sale of interest
to minority
shareholder
At 28 February
2006 14 475 5 896 2 320 454 450
Issue of shares 4 282
Net profit for
year 185 683
Dividend paid -
traditional (55 745)
Dividend paid -
special (149 853)
Share-based
payment reserve 2 020
Sale of interest
to minority (3 355)
Costs relating to
disposal of
minority interests (22 084)
At 28 February
2007 18 757 5 896 4 340 409 096
Minority
Total interest Total equity
R`000 R`000 R`000
At 28 February 2005 346 851 286 347 137
Issue of shares 2 081 2 081
Net profit for year 165 157 953 166 110
Dividend paid (38 586) (20) (38 606)
Share-based payment reserve 1 638 1 638
Purchase of minority interest (365) (365)
Sale of interest to minority
shareholder 435 435
At 28 February 2006 477 141 1 289 478 430
Issue of shares 4 282 4 282
Net profit for year 185 683 7 995 193 678
Dividend paid - traditional (55 745) (422) (56 167)
Dividend paid - special (149 853) (149 853)
Share-based payment reserve 2 020 2 020
Sale of interest to minority (3 355) 3 355
Costs relating to disposal of
minority interests (22 084) (22 084)
At 28 February 2007 438 089 12 217 450 306
SEGMENT ANALYSIS
TOTAL RETAIL MOTOR
2007 2006 2007 2006
R`000 R`000 R`000 R`000
Revenue 9 085 649 6 756 951 8 364 047 6 333 691
Profit from operations 339 757 252 711 270 582 191 781
Finance costs (32 082) (12 731) (67 872) (30 716)
Profit before taxation 307 675 239 980 202 710 161 065
Total assets 2 371 165 1 766 828 1 188 583 1 082 619
Total liabilities 1 920 859 1 288 398 788 865 739 687
Total employees 3 018 2 771 2 542 2 356
CAR HIRE MARINE AND LEISURE
2007 2006 2007 2006
R`000 R`000 R`000 R`000
Revenue 208 814 168 048 433 140 155 422
Profit from operations 20 457 21 527 25 702 14 414
Finance costs (1 784) (1 081) (8 084) (3 751)
Profit before taxation 18 673 20 446 17 618 10 663
Total assets 539 090 437 632 181 391 152 012
Total liabilities 522 523 426 817 96 144 53 433
Total employees 264 222 131 127
FINANCIAL SERVICES CORPORATE SERVICES
2007 2006 2007 2006
R`000 R`000 R`000 R`000
Revenue 32 119 29 918 47 529 69 872
Profit from operations 22 778 24 605 238 384
Finance costs 2 879 2 259 42 779 20 558
Profit before taxation 25 657 26 864 43 017 20 942
Total assets 46 148 46 583 415 953 47 982
Total liabilities 42 259 36 188 471 068 32 273
Total employees 3 3 78 63
COMMENTS ON RESULTS
1. The Group continued its impressive record of earnings growth, which now
stretches back ten years, by recording an excellent set of results.
2. Basic earnings per share increased 11,6% to 175,4 cents and headline
earnings per share 12,2% to 174,0 cents. These percentages are distorted
however, because of the accounting convention that requires secondary taxation
on companies ("STC") to be recorded as a charge against earnings. During the
year the Group declared a special dividend of 140 cents per share, on which STC
of R18,7 million was incurred. Stripping away the effect of this one-off
charge, the normalised earnings and headline earnings per share reflect
increases of 22,8% and 23,6% respectively.
3. The Group has an excellent spread of retail motor franchises covering the
full spectrum of passenger and light commercial vehicles, with no single
franchise accounting for more than 18% of revenue. Group new vehicle unit sales
grew by 23,4% to 26 806 units, whilst used vehicle sales increased by 39,5% to
20 169 units. Revenue increased 32% and the operating margin improved from 3,0%
to 3,2%.
4. Intense competition within the car hire industry has resulted in the
average daily sales rate remaining almost static during the past three years.
The recent interest rate increases have forced an adjustment to the sales rate
and this bodes well for the year ahead. Interest rate increases have added to
the cost of the car hire fleet and together with the alarming escalation in
costs relating to accident damage and theft of vehicles on hire, has reduced
profitability. National Alamo`s revenue increased 24% during the year under
review, but operating income was marginally down at R20,5 million.
5. The marine and leisure division has made good progress, with profit before
taxation income improving 65% to R17,6 million. The import and distribution
arm, CMH Recreational Products, distributes to more than 80 independent
retailers and produced solid returns during the year. The Waterworld name
continues to be the national leader in the retail marine and leisure sector.
Although under pressure from weakening currency exchange rates and the recent
interest rate hikes, the division performed well. Working capital utilisation
has been reduced over the year and will continue to be an area of focus.
6. Whilst the size of the financial services division has grown in line with
increased vehicle sales, operating income has been adversely impacted by a
change in banks` accounting policies. Certain income which was previously
recorded up front, is now spread over the period of the respective contracts.
This "loss" of income will therefore be recovered over the next three years.
7. The balance sheet remains sound and the Group ended the year with cash
resources of R331 million. Of this, R168 million was distributed in March 2007
by way of a special dividend to shareholders of R150 million and STC thereon of
R18 million.
8. After an ideal set of economic conditions over the past three years, growth
prospects are expected to be less buoyant during the new financial year. The
passenger car market is likely to enter a period of consolidation on the back
of possible further increases in interest rates, higher fuel and operating
costs, and pressure on new vehicle pricing. In addition, the Group`s earnings
will be diluted following the below mentioned sale of a 15% equity stake.
Countering the possible negatives are the Group`s plans to improve the
contribution from the parts and service departments, increased financial
services profit, and the importation, distribution and retailing of vehicles
from China. The search for suitable acquisitions will continue.
BLACK ECONOMIC EMPOWERMENT
The Group supports the Government`s BEE initiatives and over the past few years
has been successful in implementing the requirements of the Skills Development
Act and Employment Equity Act. With effect from 1 March 2006 the Group sold a
25% equity share of its BMW/Mini dealership in Umhlanga Rocks to two black
shareholders, one female. With effect from 1 December 2006, the
Group was restructured to facilitate the purchase by Thebe Investment
Corporation of a 15% equity share in the Group`s operating subsidiaries. Full
details of the transaction were contained in a circular to CMH shareholders
dated 15 November 2006 and were approved at a meeting of shareholders on 7
December 2006.
BASIS OF PREPARATION
The results of the Group for the year ended 28 February 2007 have been prepared
in accordance with International Financial Reporting Standards, the Listing
Requirements of the JSE Limited and Schedule 4 of the Companies Act of South
Africa. The accounting policies of the Group have been consistently applied to
these results and are the same as those applied to the results at 28 February
2006.
DIVIDEND
A dividend (dividend number 40) of 51 cents per share will be paid on Monday 18
June 2007 to members reflected on the share register of the Company at the
close of business on the record date Friday, 15 June 2007. Last day to trade
"cum" dividend is Friday, 8 June 2007. First day to trade "ex" dividend is
Monday, 11 June 2007. Share certificates may not be dematerialised or
rematerialised from Monday, 11 June 2007 to Friday, 15 June 2007, both days
inclusive.
CORPORATE GOVERNANCE
The Group is committed to maintaining the high standards of governance as
embodied in the King Report on Corporate Governance and complies with the
significant principles of both the Report and the JSE Limited Listing
Requirements.
The information has been reviewed by PricewaterhouseCoopers Inc., the Group`s
external auditors. A copy of their report is available for inspection at the
Company`s registered office.
By order of the board of directors
SK JACKSON BCom (Hons) (Tax Law), CA(SA)
Secretary
18 April 2007
REGISTERED OFFICE
1 Wilton Crescent, Umhlanga Ridge, 4319
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Proprietary) Limited
PO Box 61051, Marshalltown, 2107
SPONSOR
PricewaterhouseCoopers Corporate Finance (Pty) Limited
Private Bag X36, Sunninghill, 2157
DIRECTORS
M Zimmerman (Chairman), JD McIntosh (Managing)
MPD Conway, JTM Edwards, SK Jackson, VP Khanyile
RTAC Nethercott, CL Odendaal, JW Alderslade (Alternate)
Date: 18/04/2007 10:29:46 Produced by the JSE SENS Department.
