| Wed 27 Aug 2008, 7:05 | | IPL - Imperial Holdings Limited - Audited preliminary results for the period |
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IPL IPLP
IPL
IPL - Imperial Holdings Limited - Audited preliminary results for the period
ended 30 June 2008
Imperial Holdings Limited
(Registration number 1946/021048/06)
Ordinary share code: IPL
ISIN: ZAE000067211
Preference share code: IPLP
ISIN: ZAE000088076
Audited Preliminary Results for the period ended 30 June 2008
Major restructuring substantially completed
Significantly strengthened balance sheet
Revenue from continuing operations up 3% to R56 billion
Headline earnings per share from continuing operations down 49% to 615 cents
Lower profits from motor and related operations, but strong performance from
logistics in Southern Africa and Europe
Once-off charge of R2,3 billion relating to discontinued operations
Final dividend of 245 cents per share
Overview of results
The effects of essential restructuring to strengthen the balance sheet, coupled
with the downturn in the consumer economy, caused a sharp decline in profits and
a reduction in shareholders` funds.
The group returned an attributable loss of R513 million after exceptional losses
of R2,3 billion, primarily on the sale of the aviation operations and Multipart,
the UK parts distributor and on the closure of CVH, the truck assembly and
distribution business. Continuing operations achieved headline earnings of R1
143 million which is 49% down on last year, and headline earnings per share of
615 cents, also 49% down.
Net interest-bearing debt (excluding preference shares) at R8,5 billion is now
significantly lower than the R14,7 billion at December 2007 and R11,1 billion a
year ago. Gearing (net interest-bearing debt/shareholders` funds) now stands at
81% against 119% at the half year and 82% in June 2007. The unbundling of the
leasing and capital equipment division as Eqstra Holdings Limited (Eqstra),
resulted in a R5 billion reduction in interest-bearing debt at Imperial. A
further R1 067 million is due to be received on 8 September from the sale of
Tourvest, on which a profit of approximately R480 million will be realised. A
further R500 million is expected to be received on the sale of the Aviation
business within the next six months which will be used to further reduce debt.
The decline in the Imperial share price, from R141,50 at June 2007 to a combined
share price of Imperial and Eqstra of R65,30 at June 2008, necessitated further
R308 million impairment of our vendor finance loan to Lereko Mobility. In
addition, a provision of R182 million was made against a loan to the Imperial
Share Trust. Other once-off amounts included in headline earnings are a profit
of R150 million on revaluation due to currency movements on capital which has
been repatriated from our international operations, and R70 million income from
our 47% interest in Ukhamba Holdings due to that company`s receipt of Eqstra
shares through the unbundling. All these amounts are reflected in headline
earnings and resulted in a net charge to HEPS by 145 cents.
Continuing operations
The main reasons for the 49% decline in HEPS from continuing operations were:
- the sharp decline in consumer spending and vehicle sales following the effect
of five 50-point interest rate hikes during the period, aggravated by
extraordinarily high fuel prices which resulted in a significant reduction in
disposable income;
- a weaker rand affecting imported vehicle prices without corresponding sales
price increases;
- weaker equity markets causing a significant swing in mark-to-market
adjustments on the insurance portfolios; and
- Weak underwriting results in the insurance operations.
Revenue grew by 3% to R56 billion, contributed mainly by the logistics and car
rental divisions, where revenue grew by 23%. In the insurance division, the
switch to monthly from single-premium business dictated by new legislation
caused premium income to decline by 18%.
Pre-tax profit was down 41% mainly due to declines in the motor retail-related
divisions, namely distributorships, dealerships and insurance which were down by
59% in aggregate. Pre-tax profit in the non-motor retail businesses grew by 16%
which is satisfactory in view of weak used car prices and the absorption
of once-off rebranding costs in the car rental business.
The overall operating margin declined from 6,9% to 5,3%, primarily because of
lower sales volumes in the motor retail and distributorships divisions and
sharply lower profits in insurance. Margins in the logistics business improved
slightly from 6,0% to 6,1% and were lower at 13,6% from 15,2% in car rental due
to a change in the sales mix towards a higher used car content.
Results from our European logistics business were particularly pleasing. After
the restructuring of the group, the relative contribution of this business to
group operating profit increased from 7% in 2007 to 13% in 2008.
The tax rate was 38%, mainly due to the impact of non-tax-deductible charges on
the Lereko transaction and the write down of the share trust loans.
Discontinued operations
The attributable loss from discontinued operations amounted to R1,9 billion
which includes losses on the disposal of aviation (R1,3 billion) and closure of
CVH (R803 million).
At headline level, discontinued operations contributed net earnings of R190
million, principally R214 million from leasing and R91 million from Tourvest and
a loss in CVH of R106 million.
The assets of these operations, which are accounted for as held for sale, amount
to R4,4 billion, against which liabilities and creditors of R2,4 billion are
held.
Dividend
The board has resolved to maintain the group`s dividend policy of paying 40% of
headline earnings. At the half year, it was decided not to pay a dividend as the
restructuring was not yet complete. A dividend of 245 cents per share has now
been declared, which equates to 40% of headline earnings from continuing
operations for the full year.
Impairment of share trust loan and Lereko Mobility vendor finance
In addition to the R182 million impairment of the share trust loan against
earnings from continuing operations, R84 million was impaired against earnings
from discontinued operations and a total of R54 million in interest on the loan
was not recognised. Despite the impairments having been taken, the amounts due
by scheme participants are still owing in terms of the scheme rules.
Of the vendor finance loan to our BEE shareholding partner, Lereko Mobility,
R308 million was impaired against income, and a further R238 million against
equity.
Balance sheet
Total shareholders` equity reduced by R3,1 billion mainly as a result of the net
loss for the year of R513 million which includes the exceptional loss on
discontinued operations of R2,3 billion, a contribution of capital to Eqstra on
the unbundling of R1,7 billion and the capital distribution in September 2007 of
R529 million. Net debt reduced by R6,2 billion (42%) since December 2007 and the
reduction against June 2007 amounted to R2,6 billion.
Individual asset levels reduced significantly inter alia as a result of the
restructuring steps undertaken, R6,6 billion in leasing assets, and R1,4 billion
in net working capital. Transport vehicles and vehicles for hire increased by
R1,2 billion. The group`s working capital turn has improved significantly since
the unbundling of Eqstra.
Assets in the discontinued operations which are accounted for as assets held for
sale amount to R4,4 billion, against which R2,1 billion in interest-free
liabilities and R0,3 billion in interest-bearing debt are held.
Cash flow
Cash flow for the year has been affected by the restructuring steps which were
aimed at improving the group`s cash position. Total cash flow from unbundling
and disposals of subsidiaries and businesses generated cash of R5,8 billion
before the receipt of the proceeds of the disposal of Tourvest and the aviation
division. Cash flow from operations in continuing businesses, at R 3 633 million
was 15,6% lower than last year. Expansion capital expenditure amounted to R1 595
million against R1 275 million last year and replacement capital expenditure
came to R1 017 million up from R 703 million last year. In total for the year,
gross debt excluding the preference shares declined the R11 599 million from R13
845 million and cash holdings, which include cash in the insurance companies,
increased from R2 788 million to R3 148 million.
Vehicle sales
The group retailed 81 744 new and 58 983 used vehicles (including motorcycles),
respectively 83% and 98% of last year`s sales. In addition, it sold 16 736 new
vehicles to outside dealers as distributor, 17% below last year. The Australian,
Swedish and United Kingdom operations sold 12 694 new and 4 802 used vehicles,
respectively 96% and 87% of last year`s sales.
Restructuring
Several major restructuring initiatives were undertaken this year.
- In May, the leasing and capital equipment division was unbundled to
shareholders. Shareholders received ordinary shares in Eqstra on a one-for-one
basis for Imperial shares held. Eqstra was separately listed on the FTSE-JSE
on 12 May 2008. Through the unbundling, R5 billion in interest-bearing debt
was removed from Imperial`s balance sheet, whilst total equity of R1,6 billion
(before minorities and Imperial`s attributable on its treasury stock) was
contributed by Imperial to Eqstra. As a result, Imperial`s balance sheet is
now stronger and the continuous obligation to fund the capital-intensive
operations of this division has been eliminated. Eqstra, by its nature as a
leasing company, is in a better position to fund the expansion of its vehicle
and capital equipment fleets.
- On 23 April, we accepted an offer of 208 cents per share for our entire 66%
shareholding in Tourvest. R1 067 million is due as proceeds from the sale on 8
September 2008, resulting in an exceptional profit of approximately
R480 million on the disposal.
- We concluded the sale of the Ireland-based airfreight business, Air
Contractors Limited, to Petercam, a Belgian financial services group, and
Compagnie Maritime Belge NV, a Belgian shipping company for Euro22 million
with
effect from 15 February 2008. Subsequently, agreement has been reached with
the Aergo Capital group of Ireland for the sale of substantially all the
remaining assets of the aviation division as a going concern with effect from
25 November 2007, including our 50% interest in Safair Lease Finance (Pty)
Limited. The purchase consideration amounts to the sum of US$56 million and
R510 million. US$35 million of the purchase consideration will be received on
fulfilment of all conditions precedent, expected to be during the second half
of 2008, and the balance of US$21 million will be received in various amounts
between the completion date and 31 October 2012. The rand-based consideration
will be received in various tranches over a five-year period subsequent to the
completion date. The transaction is still subject to the fulfilment of certain
conditions precedent.
- The only remaining aviation assets of Imperial which are held for sale and
accounted for as a discontinued operation are a fleet of nine Hercules
aircraft, which will be leased to Aergo for a maximum of five years where
Imperial has a right to put the aircraft to Aergo at regular intervals over
the period at pre-agreed prices, and a further two MD 83 and one Boeing 737-
200 aircraft. These aircraft are running out their existing lease contracts
and will then be disposed of. In addition, an offer for the group`s 60%
interest in Naturelink (Pty) Limited has been accepted.
- These disposals exclude the group`s 62% interest in the general aviation sales
and service organisation, National Airways Corporation, which, as announced,
will not be sold and will be reported as part of our distributorships
division.
- Following losses in the commercial vehicle distribution business, CVH, we have
closed the business and terminated distributorship agreements with suppliers.
Since the discontinuation of the business, truck inventories have been reduced
by 50% to 927 new and used units.
- In the United Kingdom, we sold Multipart, the parts distribution business and
realised a loss of R294 million. The disposal was due to the disappointing
performance of this business in gaining new contracts and the recent loss of a
significant outsourcing contract with an original equipment manufacturer.
- During the second half of the year, given the impact of legislative changes on
the credit insurance industry, we critically assessed the focus, structures and
reserves of our insurance division. The group decided to merge the operations of
Regent Life and Regent Insurance, creating a uniform approach to certain markets
and achieving economies of scale in operations. Annual cost savings of R50
million will be achieved through the merger. Once-off rationalisation costs will
amount to R39 million, of which R25 million was incurred in the current
financial year. Significant process engineering and product redevelopment are
required in our insurance companies and it will take time to complete. This
assessment of our insurance interests also led to the sale of 65% of Imperial Re
to Flagstone Re, a New York-listed reinsurance group, and was renamed Flagstone
Re Africa. This company is expected to achieve a meaningful share of the local
market through the expertise and credit rating which the new controlling
shareholder will add to the business.
Strategic intentions
The restructuring programme of the past year has achieved all the objectives
envisaged. The group`s balance sheet is now able to facilitate a renewed
expansion drive and provides great resilience in the current challenging trading
conditions. Acquisitions and greenfields operations in, and complementary to,
our existing operations will be carefully pursued together with an emphasis on
optimal capital management.
The board recognises that the restructuring of the past year has left the group
more exposed to consumer cycles than in the past. We view logistics, both
locally and in Europe, as areas of preferred expansion to enhance the contra-
cyclical defensiveness of the group`s earnings base. Expansion opportunities in
knowledge-based industries which require low capital investment will be
emphasised.
Expansion during the year
Acquisitions and expansions were concentrated in our logistics businesses during
the year.
Imperial Logistics International further strengthened its position in intermodal
transport activities in Germany`s Ruhr district and growth of its waterway and
specialised road transport fleet. It acquired Laabs and Foodtankers - liquid
bulk tanker operations in Germany and Sweden, as well as Rijnaarde - a Dutch
inland waterway charterer, Maxx Thiebaut - a Belgian inland waterway company,
and Amadeus - a German short sea broker. Increased container and bulk handling
space was obtained in the Ruhr district which accounts for 70% of Germany`s
container handling. The total cost of the acquisitions amounted to R195 million.
Further expansion will occur next year in a new short sea container terminal in
Duisburg and through the re-commissioning of a container terminal in the port of
Krefeld, south of Duisburg. Its intermodal abilities were further strengthened
by the acquisition of Danes, a regional container transport company. In Panopa
Logistics, a new 25 000m2 distribution centre has been commissioned in Herten.
Subsequent to the year-end, we finalised the acquisition of Hansmann, an
automotive logistics group active in Wolfsburg and Multinaut Donaul Logistic, a
waterway charter company active in Austria, which gives us access to waterway
traffic along the Danube river.
In South Africa, the logistics division acquired a 51% interest in Volition, a
logistics consultancy business, demonstrating the group`s desire to invest in
asset light businesses with high returns. The competition authorities also
recently approved the acquisition of RP Logistix, a long-distance transport
group based in the Western Cape.
In the motor dealerships division, a new Mercedes Benz Lifestyle Centre was
opened in Bedfordview, and a MAN truck dealership acquired in Johannesburg,
strengthening the range of commercial vehicles on offer from our group.
Divisional reports
Logistics
Logistics Southern Africa
2008 2007 %
Revenue 9 733 8 018 21,4
Operating profit 706 619 14,1
Operating margin 7,2% 7,7%
Southern African logistics returned a very satisfactory performance in spite of
high fuel costs impacting on margins and lower consumer spending affecting
volumes in the fast-moving consumer goods (FMCG) segment of the business.
Revenue growth of 21,4% was boosted by the diesel price which increased by more
than 76% over the year and has been recovered from customers.
The division had some underperforming companies and contracts in certain of its
businesses, which led to corrective actions and to the sale of the assets of
Forecourt Express, the motor vehicle transport group that served the local
OEM`s. However, the effect of this has been counteracted by a number of
businesses that have performed better than expected.
The division generated good cash flow after net capital expenditure of R625
million. During the period the capitalisation of the group`s divisions was
aligned between the divisions and head office, leading to increased debt and
interest at divisional levels.
Major new contracts were won during the year and the outcome of significant new
tenders is pending. A greater portion of the turnover and profitability of this
division originated from non-transport activities and this will be further
emphasised through growth in our service-related and warehousing logistics
businesses.
International Logistics
2008 2007 %
Revenue 8 253 6 544 26,1
Operating profit 396 250 58,4
Operating margin 4,9% 3,8%
Imperial Logistics International experienced favourable economic conditions in
its markets, which consist of inland waterway shipping of bulk and containerised
freight, inland port terminal operations in Western Europe and automotive spare
parts, paper and steel logistics. The reporting period for most of the companies
spanned 13 months with the change in the group`s year-end. Revenue grew by 26,1%
to R8,3 billion (10,3% in euros). The container terminals on the Rhine increased
revenue significantly, as did Panopa Logistics.
Operating profit grew strongly by 58,4% to R396 million (42% in euros). Fuel
cost increases could not be fully passed on to customers and affected margins
slightly. Inland waterway shipping in Imperial Reederei and container and bulk
terminals in Neska performed very well. The terminals operated at full capacity
as a result of the important European and global markets which we serve in these
businesses. Significant additional capacity is being added with the objective of
doubling container handling to two million TEU`s (twenty foot equivalent units)
per year by 2015. Excess demand on our inland waterway fleet is mainly fulfilled
through growth of our chartering activities.
Panopa Logistics also performed well despite staff cost pressures in the VW
supply chain contract in Poland where Panopa runs its largest branch. Gilhuber
has been returned to profitability through decisive management action and a
number of small unsuccessful businesses have been disposed of.
Car Rental and Tourism
2008 2007 %
Revenue 2 712 2 258 20,1
Operating profit 370 344 7,6
Operating margin 13,6% 15,2%
Good turnover growth was achieved, mainly due to higher growth in the lower-
margin used car segment of the division which outpaced rental growth. However,
margins in both segments were largely maintained.
The operational consolidation of Imperial Car Rental and Europcar is now
complete and a significant investment has been made in the rebranding from
Imperial to Europcar. The Europcar franchise has been extended on favourable
terms for a significant period. In addition, we secured a referral agreement for
the National and Alamo brands and relinquished the Sixt franchise in the
interest of realigning the Tempest brand in particular segments. Tempest has
completely overhauled its strategy which will have the added benefit of
positively affecting our capital expenditure in the division as the vehicle
fleet will be utilised for longer.
Operationally, the fleet size increased by 10% and utilisation reduced slightly,
whilst accident repair costs and theft losses increased by more than the fleet
size.
The tourism assets performed well but results were affected by closure costs of
certain small unprofitable operations. Once-off costs related to the rebranding
and restructuring in the car rental and tourism division affected the operating
profit growth of the division significantly.
Distributorships
2008 2007 %
Revenue 15 056 17 078 (11,8)
Operating profit 751 1 526 (50,8)
Operating margin 5,0% 8,9%
This division now consists of Associated Motor Holdings (AMH), National Airways
Corporation (NAC) and the South African parts distribution business. Prior year
figures have been restated for comparative purposes.
AMH had a difficult year due to low consumer demand for motor vehicles. Retail
unit sales were 18% lower than last year as entry-level dealership sales - where
AMH is strong - were worst affected by the vehicle sales slowdown. With a high
fixed-cost component and a weaker rand against its suppliers` currencies,
margins were down as fully compensating price increases could not be achieved.
As the dealer base in AMH is still being developed and comprises mostly of cost-
effective multi-franchise operations, no dealerships were closed in response to
temporary lower vehicle demand. Trading in the Australian dealerships was also
subdued, but the loss before tax was reduced from AU$5,6 million to AU$3,4
million.
The business model in the auto parts business was revised and a loss incurred
following inventory write downs.
Once the sale of the aviation division is complete, NAC, which is primarily an
aircraft sales, charter and training organisation, will be the group`s only
aviation-related business. The company showed good improvement in margins and
profit before and after interest. Strong growth in aircraft sales in South
Africa was achieved with 108 units sold (67 new and 41 used). 43 Air School,
with expanded facilities at Bisho airport, made an important contribution.
Dealerships
2008 2007 %
Revenue 19 181 19 229 (0,2)
Operating profit 470 524 (10,3)
Operating margin 2,5% 2,7%
As in all our motor and related businesses, trading was difficult, although
turnover was maintained through higher truck sales, workshop and parts
activities. Whilst the division benefited from profits on the disposal of
properties, it was gratifying to see operating margins in extremely tough
conditions at 2,2% excluding profits on disposal of properties. The strategy of
diversification into commercial vehicles and non-OEM products such as canopies
and caravans has clearly paid off. Since 2006, the composition of the division`s
revenue between sales of new passenger and commercial vehicles has changed from
66% passenger and 34% commercial to 48% passenger and 52% commercial in 2008.
This is partly due to the outperformance of commercial vehicle sales against
passenger vehicle sales, but also from a conscious move towards commercial
vehicle activity.
Finance costs rose due to increased borrowings for property investments, stock
and higher interest rates, causing pre-tax profit to decline by 23%.
Amid tough trading conditions, eight new and 11 used car dealerships were closed
and two sold, whilst we proceeded with a number of upgrades and relocations to
better position the division for an upturn in the motor market, which is
expected to follow the peak in the short-term interest rate cycle.
We are satisfied with the performance of our dealerships in the UK and Sweden
under difficult trading conditions.
The division expanded its medium and heavy truck dealership footprint by
acquiring a MAN dealership as well as a flagship International dealer which was
taken over from Commercial Vehicle Holdings.
Passenger unit sales were down by 22% but light, medium and heavy commercial
vehicle sales were up 10%. Used vehicle retail sales were 10% lower. Beekman
Canopies and Jurgens Caravans also had lower sales but profitability remained
satisfactory.
Insurance
2008 2007 %
Revenue 2 594 3 151 (17,7)
Operating profit 249 713 (65,1)
Operating margin 9,6% 22,6%
The overall result of insurance operations was sharply down due to lower
investment income on equity portfolios and lower underwriting results. Premium
income also declined as a result of the National Credit Act (NCA) which
prescribes the selling of monthly premium policies instead of single premium
policies. This was particularly evident in the life company.
During the second half of the financial year, certain estimates and judgements
on reserving were revised, resulting in stronger reserves in both insurance
companies. These adjustments, together with an extremely difficult motor vehicle
underwriting cycle and weak returns on investment portfolios caused a small loss
in the division in the second half.
The number of credit life and Adcover policies written was well down on last
year from the combined effect of the NCA and lower vehicle sales. Policy lapses
were also significantly higher due to the switch to monthly from single premium
business.
In response to these challenges to our insurance operations, we decided to merge
the operations of the two companies. Significant cost savings will be achieved
through a combination of one focused sales force and rationalised back-office
operations.
Regent Life paid a fine of R 1 million following the FSB investigation into
commission payments in the broader credit insurance industry. This brings the
investigation into Regent Life to a close. The Nienaber Commission under the
auspices of the LOA and SAIA recognised Regent Life`s efforts at bringing
industry problems to the fore, and made certain other recommendations regarding
trade practices in the industry.
Income from associates
Income from associates increased to R278 million. The main contributor was our
49,9% interest in Imperial Bank which increased its contribution by 2% to R206
million for the period. This was a very satisfactory performance under difficult
trading conditions in the consumer lending market, especially in motor vehicles.
The property finance division of the bank contributed well. Renault incurred a
substantial attributable loss of R90 million. Imperial does not have management
control of Renault South Africa, but is working with Renault in France to
restore the company to profitability, based on new models that will be locally
produced and which are expected to be successful. The return from the group`s
47% interest in Ukhamba Holdings included a once-off gain of R70 million on the
receipt of deferred shares in Eqstra.
Black economic empowerment and skills development
Despite the decline in the Imperial share price, the impact on the broad range
of beneficiaries of our BEE transaction with Ukhamba Holdings is still very
positive. An aggregate sum of approximately R800 million has been accrued to
previously disadvantaged staff members of the group, both current and former
employees. Based on the current share price, benefits to the Lereko Consortium
through its 51% shareholding in Lereko Mobility have decreased. However, the
transaction still has seven years to run, which leaves the possibility for a
recovery of value.
An executive management training programme was launched during the year as part
of an allocation of R100 million to a skills development and training fund. In
addition, a motor apprentice training centre has been established in Cape Town
and a new training facility is being built in Germiston. These initiatives will
augment an extensive range of training at various levels of management
throughout the group, with particular emphasis on previously disadvantaged
individuals.
Prospects
We expect low consumer spending to continue for most of our 2009 financial year,
causing our motor retail and ancillary businesses to remain under severe
pressure, as they were for the past financial year. These conditions affect our
dealerships, distributorships, insurance, banking and, partially, our car rental
business. The car rental division will, however, benefit from the Europcar
merger and brand refocusing.
Whilst it is not immune to the current economic slowdown, logistics in Southern
Africa is better able to maintain margins and volumes through its broad base of
customers and will benefit from improved operational efficiencies. The European
logistics business will find it more difficult to grow from a current high base,
particularly as the global economy is slowing, but the benefits of recent
prudent organic and acquisitive expansion should be evident.
The benefits of the past year`s restructuring should begin to emerge as group
debt is being reduced and the underperforming commercial vehicle and aviation
businesses have been closed, sold or in the process of being sold.
Overall, we expect performance in the year ahead to remain weak as long as
consumer-driven economic growth in South Africa is under strain.
By order of the board
TS Gcabashe, Chairman
HR Brody, Chief Executive
AH Mahomed, Financial Director
Declaration of dividends
Preference shareholders and ordinary shareholders
Notice is hereby given that:
- a preference dividend of 554,384 cents per preference share has been declared
payable to holders of non-redeemable, non-participating preference shares; and
- an ordinary dividend of 245 cents per ordinary share has been declared payable
to ordinary shareholders.
The company has determined the following salient dates for the payment of the
preference dividend and ordinary dividend:
2008
Last day for preference shares and Thursday, 18
ordinary shares respectively to trade cum- September
preference dividend and cum ordinary
dividend
Preference and ordinary shares commence Friday, 19 September
trading ex- preference dividend and ex
ordinary dividend respectively
Record date Friday, 26 September
Payment date Monday, 29 September
Share certificates may not be dematerialised/rematerialised between Friday, 19
September 2008 and Friday, 26 September 2008, both days inclusive.
On Monday, 29 September 2008, amounts due in respect of the preference dividend
and the ordinary dividend will be electronically transferred to the bank
accounts of certificated shareholders that utilise this facility. In respect of
those who do not, cheques dated 29 September 2008 will be posted on or about
that date. Shareholders who have dematerialised their shares will have their
accounts, held at their CSDP or broker, credited on Monday, 29 September 2008.
In terms of the Exchange Control Regulations of the Republic of South Africa,
cash payments based on emigrant`s shares controlled in terms of the Exchange
Control Regulations will be forwarded to an Authorised Dealer in foreign
exchange controlling their blocked assets. The elections by emigrants for the
above purpose must be made through the Authorised Dealer in foreign exchange
controlling their blocked assets. Payments due to non-residents are freely
transferable from the Republic.
Preferred ordinary shareholders (Unlisted)
Notice is hereby further given that a preferred ordinary dividend of 267,5 cents
per preferred ordinary share has been declared and is payable to preferred
ordinary shareholders recorded in the registers of the company at the close of
business on Thursday, 25 September 2008.
On Friday, 26 September 2008 the preferred ordinary dividend will be
electronically transferred to the bank accounts of preferred ordinary
shareholders.
On behalf of the board
RA Venter
Group Company Secretary
26 August 2008
Condensed income statement
Restated
30 June 25 June
2008 2007 %
For the period ended Rm Rm change
CONTINUING OPERATIONS
Revenue 55 927 54 451 3
Profit from operations before
depreciation
and recoupments 4 078 4 642
Depreciation, amortisation and (1 086) (889)
recoupments
Operating profit 2 992 3 753 (20)
Foreign exchange gains 145 22
Fair value gains (losses) to foreign 1 (2)
exchange derivatives
Impairment of share scheme loans (182)
Fair value (losses) gains on other (314) 19
financial instruments
Exceptional items 1 15
Profit before net financing costs 2 643 3 807 (31)
Net finance cost (807) (478)
Income from associates and joint 278 236
ventures
Profit before taxation 2 114 3 565 (41)
Income tax expense 707 1 008
Profit from continuing operations 1 407 2 557
DISCONTINUED OPERATIONS (1 920) 597 (422)
- Trading profit from operations 349 597 (42)
- Fair value loss on discontinuation (2 269)
Net (loss) profit for the period (513) 3 154 (116)
Attributable to:
Equity holders of Imperial Holdings (870) 2 776 (131)
Limited
Minority interest - continuing 162 204 (21)
operation
Minority interest - discontinued 195 174 12
operation
(513) 3 154 (116)
Earnings per share* Cents Cents
Basic
- Total (510) 1 470 (135)
- Discontinued operations (1 139) 228 (600)
- Continuing operations 629 1 242 (49)
Diluted
- Total (420) 1 363 (131)
- Discontinued operations (1 020) 208 (590)
- Continuing operations 600 1 155 (48)
Headline earnings per share*
Headline earnings as previously
stated
- Basic 1 434
- Diluted 1 330
Basic current year
- Total 718 1 377 ( 48)
- Discontinued operations 103 161
- Continuing operations 615 1 216
Diluted current year
- Total 680 1 278 ( 47)
- Discontinued operations 92 147
- Continuing operations 588 1 131
Headline earnings reconciliation* Rm Rm
Attributable (loss) profit (870) 2 776
Attributable to preferred ordinary (78) (52)
shareholders
Headline earnings from continuing and (948) 2 724
discontinued operations
Impairment of property, plant and 5 22
equipment
Profit on sale of property, plant and (24) (228)
equipment
Fair value loss on discontinued 2 605 -
operations
Exceptional item net of tax (1) (15)
Exceptional items included in income 6 (3)
from associates
Exceptional item included in trading 5
operation from discontinued
operations
Taxation (310) 41
Minorities - 4
Headline earnings - basic 1 333 2 550
Attributable to preferred ordinary 78 52
shareholders
Headline earnings - diluted 1 411 2 602
*Based on the weighted average number
of shares in issue for the period
Preferred ordinary shares Cents Cents
- Basic 535 357
Additional information
Net asset value per share 4 732 6 223
Number of ordinary shares (million)
- in issue 188 187
- weighted average 186 185
- weighted average for diluted 207 204
earnings
Number of other shares in issue
(million)
- Preferred ordinary 15 15
- Deferred ordinary 17 19
Net finance cost Rm Rm
Net interest paid 1 527 1 040
Capitalised to property, plant and (19) (12)
equipment
Foreign exchange loss on monetary 376 60
items
Fair value gains on borrowings and (417) (62)
interest swaps
Net finance cost discontinued (660) (548)
operations
807 478
Exceptional items
Impairment of goodwill (47) (14)
Profit (loss) on disposal of 48 34
investments in subsidiaries,
associates and joint ventures
Loss on closure of business (5)
1 15
Condensed balance sheet
30 June 25
June
2008 2007
At June Rm Rm
ASSETS
Intangible assets 897 1 238
Investments in associates and joint ventures 2 017 2 732
Property, plant and equipment 5 681 5 441
Transport fleet 3 465 2 789
Leasing assets 337 6 990
Vehicles for hire 1 286 1 012
Deferred tax assets 637 450
Other investments and loans 2 320 2 793
Other non-current financial assets 330 842
Inventories 6 442 9 436
Taxation in advance 111 140
Trade and other receivables 6 821 8 883
Cash resources 3 148 2 788
Assets classified as held for sale 4 440
Total assets 37 932 45 534
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 10 876
Shares repurchased (1 816) (1
955)
Other reserves 1 273 1 203
Retained earnings 10 138 12 397
Attributable to Imperial Holdings` shareholders 9 605 12 521
Minority interest 811 946
Total shareholders` equity 10 416 13 467
Liabilities
Non-redeemable, non-participating preference 441 441
shares
Retirement benefit obligations 286 230
Interest-bearing borrowings 11 599 13 845
Liabilities under insurance contracts 1 535 1 722
Deferred tax liabilities 549 1 196
Other non-current financial liabilities 98 13
Provisions for liabilities and other charges 905 1 154
Trade and other payables 9 160 12 526
Current tax liabilities 586 940
Liabilities directly associated with assets 2 357
held for sale
Total liabilities 27 516 32 067
Total equity and liabilities 37 932 45 534
Capital commitments 509 1 426
Contingent liabilities 595 600
Condensed cash flow statement
Restat
ed
30 June 25
June
2008 2007
For the period ended Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities 6 077 6 786
Net working capital movements (388) (775)
Cash generated by operations 5 689 6 011
Cash generated by operations - continuing 3 633 4 305
businesses
Cash generated by operations - discontinued 2 056 1 706
businesses
Net financing costs (1 426) (1
026)
4 263 4 985
Taxation paid (1 396) (1
106)
Net cash flows from operating activities 2 867 3 879
CASH FLOWS FROM INVESTING ACTIVITIES
Net unbundling, acquisition and disposal of 5 372 (462)
subsidiaries and businesses
Expansion capital expenditure (1 595) (1
275)
Net replacement capital expenditure (1 017) (703)
Net capital expenditure discontinued businesses (2 384) (1
846)
Investments, equities and loans 680 (462)
Net cash flows from investing activities 1 056 (4
748)
CASH FLOWS FROM FINANCING ACTIVITIES
Hedge cost of share options (67) (66)
Change in minority interest (69)
Purchase of treasury stock net of transfers (10) (298)
from share purchase trust
Dividends paid (225) (429)
Capital distribution (607) (761)
Decrease increase in long term borrowings (1 165) 1 946
Net cash flows from financing activities (2 074) 323
Net increase/(decrease) in cash and cash 1 849 (546)
equivalents
Condensed statement of changes in equity
Share
capit
al
and Share Other Retain Minori
ed ty
premi repurchase reserv earnin intere Total
um s es gs st
For the period Rm Rm Rm Rm Rm Rm
ended June
Balance at 25 1 762 (2 497) 1 272 9 465 785 10
June 2006 787
Net gains 142 1 143
arising on
translation of
foreign
operations
Movement in (569) (77) (646)
hedge accounting
reserve
Payments on (66) (66)
share option
hedging
Net losses not (493) (76) (569)
recognised in
the income
statement
Net attributable 2 776 378 3 154
profit for the
year
Net increase in 25 25
minority
interest
Contingency 47 (47)
reserve created
in terms of the
Insurance Act
Transfer of 16 (16)
Imperial Banks`
credit risk
reserve to
statutory
reserve
Purchase of 2 (298) (298)
630 386 ordinary
shares
Deconsolidation 715 361 482 1 558
of Lereko
Mobility
Capital (511) 49 (462)
distribution of
244 cents per
ordinary share
in October 2006
Capital (336) 37 (299)
distribution of
160 cents per
ordinary share
in April 2007
Dividend of 120 (224) (224)
cents per
ordinary share
in April 2007
Capital (39) 39
distribution of
267,5 cents per
preferred
ordinary share
in September
2006
Dividend of (39) (39)
267,5 cents per
preferred
ordinary share
in March 2007
Minority share (166) (166)
of dividends
Balance at 25 876 (1 955) 1 203 12 397 946 13
June 2007 467
Net gains 213 21 234
arising on
translation of
foreign
operations
Movement in 29 1 30
hedge accounting
reserve
Share option (62) (62)
hedging cost
Revaluation of 167 167
investment in
Eqstra Limited
Revaluation of (238) (238)
Lereko Mobility
call option
Net profits not 109 22 131
recognised in
the income
statement
Net attributable (870) 357 (513)
(loss) profit
for the period
Share-based (5) (5)
equity released
Unbundling of (193) 183 (35) (1 (289) (1
the Leasing and 388) 722)
Capital
equipment
division
Share issue (1) (1)
expenses
Contingency 1 (1)
reserve created
in terms of the
Insurance Act
Purchase of 981 (109) (109)
115 ordinary
shares
Capital (594) 65 (529)
distribution of
280 cents per
ordinary share
in September
2007
Capital (39) (39)
distribution of
267,5 cents per
preferred
ordinary share
in September
2007
Capital (39) (39)
distribution of
267,5 cents per
preferred
ordinary share
in April 2008
Minority share (225) (225)
of dividends
Balance at 30 10 (1 816) 1 273 10 138 811 10
June 2008 416
Discontinued operations
The following have been identified as disposal groups:
- Aviation division, except NAC, sold subject to conditions precedent.
- Assets of Tyco are in the process of being sold.
- Tourvest, this JSE listed entity was sold subsequent to the year-end and
payment is expected in September 2008.
- Leasing and capital equipment division, unbundled to shareholders in May 2008.
All associated assets and liabilities have been classified as discontinued
operations.
Basis of preparation
The group financial results from which these condensed financial statements were
derived have been prepared on the historical basis excluding financial
instruments which are fair valued and conform to International Financial
Reporting Standards (IFRS). This condensed consolidated financial information
has been prepared in accordance with IAS 34 - Interim Financial Reporting.
Accounting policies
The accounting policies adopted and methods of computation in preparation of the
condensed consolidated financial information are consistent with those of the
annual financial statements for the year ended 25 June 2007 except for Circular
2007/08 issued by the South African Institute of Chartered Accountants which
became applicable during the reporting period.
This has the impact of excluding any realised gains or losses on the value of
our fleets.
The prior year headline earnings per share figures have been restated
accordingly.
Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the period ended 30 June 2008. The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. A copy of their audit report is available for
inspection at the company`s registered office. These summarised financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements.
Subsequent events
There have been no material events since year-end that require further
disclosure.
Material acquisitions
The material acquisitions of the group in the 2008 financial
period are as follows:
Nature Purchase Fair value Goodwil Acquisitio
of consider- of net l n date
business ation assets
acquired
Rm Rm Rm Rm
Maxx Thiebaut See note 33 17 16 December
2 2007
Foodtankers See note 33 14 19 February
Group 2 2008
Rijnaarde B.V. See note 61 1 60 July 2007
2
Amadeus See note 14 2 12 March 2008
Schiffahrt und 2
Speditions
GmbH
RP Logistics See note 12 12 June 2008
(Pty) Limited 2
153 34 119
1.?The purchase consideration includes shares acquired, properties
and inter- group loan balances that formed part of the purchase
consideration.
2.?Engaged in transport and logistics.
Percentage Contributio Contribution
shareholdin n to to profit
g revenue before tax
% since since
acquisition acquisition
Rm Rm
Maxx Thiebaut 55 2
Foodtankers 51 82 3
Group
Rijnaarde B.V. 100 254 20
Amadeus 80 41 4
Schiffahrt und
Speditions
GmbH
RP Logistics 60 90 7
467 36
1.?The purchase consideration includes shares acquired, properties
and inter-group loan balances that formed part of the purchase
consideration.
2.?Engaged in transport and logistics.
For segmental information please go to www.imperial.co.za
Non-executive directors
TS Gcabashe (Chairman), S Engelbrecht, P Langeni, MJ Leeming, JR McAlpine, MV
Moosa, MV Sisulu, RJA Sparks, A Tugendhaft (Deputy chairman), Y Waja
Executive Directors
HR Brody (Chief Executive), OS Arbee, MP de Canha, RL Hiemstra, N Hoosen, AH
Mahomed, GW Riemann (German)
Company Secretary
RA Venter
Business address and registered office
Imperial Place, Jeppe Quondam, 79 Boeing Road East, Bedfordview, 2007
Share transfer secretaries
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street,
Johannesburg, 2001
Sponsor
Merrill Lynch SA (Pty) Limited, 138 West Street, Sandown Sandton, 2196
The results announcement is available on the Imperial Holdings website:
www.imperial.co.za
Date: 27/08/2008 07:05:05 Produced by the JSE SENS Department.
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