| Wed 16 Apr 2008, 12:00 | | CMH - Combined Motor Holdings - Reviewed Results F |
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CMH
CMH
CMH - Combined Motor Holdings - Reviewed Results For The Year Ended
29 February 2008 and dividend declaration
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 29 FEBRUARY 2008
GROUP FINANCIAL HIGHLIGHTS
REVIEWED AUDITED
% 29 FEBRUARY 28 FEBRUARY
CHANGE 2008 2007
Revenue (R`000) (3) 8 811 995 9 085 649
Operating profit (R`000) (38) 212 237 339 757
Weighted average number of shares in
issue (`000) 1 107 195 105 867
Number of shares for dilution
calculation (`000) - 109 425 109 104
Earnings per share (cents) (48) 91,6 175,4
Diluted earnings per share (cents) (47) 89,7 170,2
Headline earnings per share (cents) (44) 97,7 174,0
Diluted headline earnings per
share (cents) (46) 95,7 176,2
Final dividend per share (cents) (45) 28,0 51,0
Total assets (R`000) (5) 2 247 845 2 371 165
Abridged group income statement
REVIEWED AUDITED
29 FEBRUARY 28 FEBRUARY
% 2008 2007
CHANGE R`000 R`000
Revenue 8 811 995 9 085 649
Cost of sales (7 486 603) (7 718 177)
Gross profit 1 325 392 1 367 472
Other operating income 12 698 -
Impairment of goodwill (10 400) -
Selling and administration expenses (1 115 453) (1 027 715)
Operating profit (38) 212 237 339 757
Investment income 7 218 10 444
Finance costs (52 690) (42 526)
Profit before taxation (46) 166 765 307 675
Taxation (52) (54 857) (113 997)
Net profit for the year (42) 111 908 193 678
Attributable to:
Equity holders of the Company (47) 98 173 185 683
Minority shareholders 72 13 735 7 995
(42) 111 908 193 678
Reconciliation of headline earnings
Net profit for the year 111 908 193 678
Non-trading items
- capital profits (2 750) (1 666)
less: capital gains tax 109 193
(2 641) (1 473)
- impairment of goodwill 10 400 -
10 400 -
Headline earnings (38) 119 667 192 205
Headline earnings attributable to:
Equity holders of the Company (43) 104 768 184 210
Minority shareholders 86 14 899 7 995
(38) 119 667 192 205
ABRIDGED GROUP CASH FLOW STATEMENT
REVIEWED AUDITED
29 FEBRUARY 28 FEBRUARY
2008 2007
R`000 R`000
Operating profit adjusted for
non-cash items 240 294 383 945
Working capital changes:
Movement in inventory 29 115 (231 528)
Movement in trade and other receivables 8 058 (53 588)
Movement in trade and other payables 54 230 141 895
Cash generated from operations 331 697 240 724
Net finance costs paid (45 472) (32 082)
Dividends paid (215 841) (55 745)
Taxation paid (106 709) (92 119)
Cash flow from operating activities (36 325) 60 778
Cash flow from investing activities (41 735) (157 789)
Cash flow from financing activities (28 985) 293 590
Net cash flow for year (107 045) 196 579
Cash and cash equivalents at
beginning of year 330 513 133 934
Cash and cash equivalents at end of year 223 468 330 513
ABRIDGED GROUP BALANCE SHEET
REVIEWED AUDITED
29 FEBRUARY 28 FEBRUARY
2008 2007
R`000 R`000
Assets
Non-current assets
Plant and equipment 71 717 69 441
Goodwill 144 346 154 574
Investments 124 379 106 001
Deferred taxation 36 396 32 296
376 838 362 312
Current assets 1 871 007 2 008 853
Total assets 2 247 845 2 371 165
Equity and liabilities
Capital and reserves
Share capital and reserves 472 716 438 089
Minority interest 12 121 12 217
Total equity 484 837 450 306
Non-current liabilities
Advance from minority shareholders 252 317 269 953
Interest-bearing borrowings 5 314 7 092
Assurance funds 26 217 37 669
Lease liabilities 77 905 63 491
361 753 378 205
Current liabilities 1 401 255 1 542 654
Total equity and liabilities 2 247 845 2 371 165
Net asset value per share (cents) 451 421
GROUP STATEMENT OF CHANGES IN EQUITY
NON- SHARE-BASED
SHARE DISTRIBUTABLE PAYMENT RETAINED
CAPITAL RESERVE RESERVE EARNINGS
R`000 R`000 R`000 R`000
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)
Loss arising on
sale of business (22 084)
At 28 February 2007 18 757 5 896 4 340 409 096
Issue of shares 1 305
Net profit for year 98 173
Dividend paid (65 988)
Share-based
payment reserve 1 137
Purchase of
minority interest
At 29 February 2008 20 062 5 896 5 477 441 281
MINORITY TOTAL
TOTAL INTEREST EQUITY
R`000 R`000 R`000
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 -
Loss arising on sale of business (22 084) (22 084)
At 28 February 2007 438 089 12 217 450 306
Issue of shares 1 305 1 305
Net profit for year 98 173 13 735 111 908
Dividend paid (65 988) (13 594) (79 582)
Share-based payment reserve 1 137 1 137
Purchase of minority interest (237) (237)
At 29 February 2008 472 716 12 121 484 837
SEGMENT ANALYSIS
TOTAL RETAIL MOTOR
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Revenue 8 811 995 9 085 649 8 132 421 8 364 047
Operating profit 212 237 339 757 163 797 270 582
Net finance costs (45 472) (32 082) (86 274) (67 872)
Profit before taxation 166 765 307 675 77 523 202 710
Total assets 2 247 845 2 371 165 1 208 618 1 188 583
Total liabilities 1 763 008 1 920 859 848 495 788 865
Number of employees 2 829 3 018 2 386 2 542
CAR HIRE MARINE AND LEISURE
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Revenue 219 789 208 814 388 503 433 140
Operating profit 9 790 20 457 10 281 25 702
Net finance costs (1 737) (1 784) (7 913) (8 084)
Profit before taxation 8 053 18 673 2 368 17 618
Total assets 485 786 539 090 157 356 181 391
Total liabilities 513 978 522 523 80 409 96 144
Number of employees 278 264 86 131
FINANCIAL SERVICES CORPORATE SERVICES
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Revenue 23 865 32 119 47 417 47 529
Operating profit 24 584 22 778 3 785 238
Net finance costs 3 828 2 879 46 624 42 779
Profit before taxation 28 412 25 657 50 409 43 017
Total assets 44 847 46 148 351 238 415 953
Total liabilities 33 977 42 259 286 149 471 068
Number of employees 3 3 76 78
COMMENTARY ON RESULTS
1. After ten years of earnings growth, the Group results for the year under
review were disappointing. The change in the economic cycle, brought about
by such factors as the eNaTIS debacle, the introduction of the National
Credit Act, interest rate hikes and rising fuel prices, has been both
profound and sudden.
2. All segments of the Group`s business have suffered from lower volumes,
squeezed margins and higher operating costs. Operating profit declined 38% to
R212,2 million and net profit 42% to R111,9 million. Following the sale of a
15% equity share in the Group, in terms of a Black Economic Empowerment deal
concluded in December 2006, the portion of net profit allocated to minority
shareholders increased, leaving attributable earnings 47% below those of 2007.
3. National sales of passenger vehicles fell 12,6% and light commercial
vehicles 1,6% during the financial year. Exacerbating those declines has been
the fact that a number of franchises represented by the Group showed even
higher decreases in sales levels. Dealer sales of passenger vehicles during
the second half of the year were 20% below the corresponding period in 2006.
Used car sales were similarly affected, with volumes estimated to have declined
20%. The sudden erosion of both new and used vehicle volumes and trading
margins will inevitably have a dramatic effect on dealerships with expensive
infrastructure and high fixed costs.
4. Whilst revenue in the car hire segment (recently re-branded as First Car
Rental) increased marginally, the increased cost of financing the fleet,
coupled with softer resale values, combined to yield a R5,6 million fall in the
gross profit margin. Together with a 14% increase in operating expenses,
following the opening of new outlets, this resulted in a 57% fall in profit
before taxation.
5. The marine and leisure division operates in the sharp end of economic
cycles, and the fundamental and sudden deterioration in trading conditions had
a significant negative impact on operating results. Long lead times from
overseas suppliers led to a build-up of stock levels and, in an attempt to
reduce the asset base, product was heavily discounted and margins declined.
6. The financial services segment, recognised as a more stable and long-term
business and not directly affected by sharp movements in economic cycles,
recorded a pleasing 11% increase in profit before taxation. Of medium to
longer-term concern, however, has been the reduced level of sales of insurance
policies resulting from the NCA provision that prohibits the sale of term
products.
7. Tough restructuring and cost-cutting measures were implemented during the
second half of the year. Sub-performing branches with low prospects of
recovery have been terminated and the head count has been reduced. Working
capital assets are now in line with the lower trading volumes and the Group`s
cash position is good.
8. Economic conditions are not anticipated to improve during the year ahead.
National vehicle sales are expected to decline between 7% and 10% on average,
with the major fall expected in the first six months. Continuing fuel price
increases, possible further increase in interest rates, and the recent
electricity crisis have reduced business confidence to its lowest level in
seven years. Despite this, the directors believe that the Group has "taken its
medicine" and, in the absence of further major setbacks in the economic
environment, will show a modest, real increase in earnings during the year
ahead.
DIVIDEND
A dividend (dividend number 42) of 28 cents per share will be paid on Tuesday
17 June 2008 to members reflected in the share register of the Company at the
close of business on the record date, Friday, 13 June 2008. Last day to trade
"cum" dividend is Friday, 6 June 2008. First day to trade "ex" dividend is
Monday, 9 June 2008. Share certificates may not be dematerialised or
rematerialised from Monday, 9 June 2008 to Friday, 13 June 2008, both days
inclusive.
BASIS OF PREPARATION
The results of the Group for the year ended 29 February 2008 have been prepared
in accordance with IAS34: Interim Financial Reporting, International Financial
Reporting Standards, the International Financial Reporting Interpretation
Committee interpretations adopted by the International Accounting Standards
Board, 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 2007.
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 Listings
Requirements.
The information has been reviewed by PricewaterhouseCoopers Inc., the Group`s
external auditor. A copy of their review 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)
Company Secretary
16 April 2008
REGISTERED OFFICE
1 Wilton Crescent, Umhlanga Ridge, 4319
TRANSFER SECRETARIES
Computershare Investor Services (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), LCZ Cele,
MPD Conway, JTM Edwards, L Gadd, SK Jackson, VP Khanyile, RTAC Nethercott,
CL Odendaal, JW Alderslade (alternate)
www.cmh.co.za
Date: 16/04/2008 12:00:01 Produced by the JSE SENS Department.
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