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IPL/IPLP - Imperial Holdings Limited - Audited Preliminary Results for the
year ended 30 June 2009
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 year ended 30 June 2009
HIGHLIGHTS
HEPS from continuing operations 13% higher to 698 cents
Cash generated by continuing operations 43% higher to R5,2 billion
Revenue from continuing operations 7% lower to R52,2 billion
Operating profit 16% lower to R2,5 billion
A strong balance sheet
A final dividend of 120 cents per share
Audited Preliminary Results for the year ended 30 June 2009
Overview of results
We are pleased with these results which were achieved under very difficult
economic conditions, particularly in the motor retailing environment. Headline
earnings per share ("HEPS") were 13% higher than last year at 698 cents, and
capital management and cash flow were good. Divisional results generally
exceeded our expectations, which were tempered by the sudden downturn in the
economy during the year. The group also benefitted from the restructuring
actions taken over the past two years.
Revenue at R52,2 billion and operating profit at R2 453 million were 7% and
16% lower, respectively. The results were marked by declining profits in the
predominantly motor vehicle retailing divisions, Dealerships and
Distributorships, which combined, returned a 13% decline in revenue and a 34%
decline in operating profit, while revenue in the rest of the group rose by 3%
and operating profit declined by 4%. Revenue from our services activities grew
to R21,7 billion which demonstrates the magnitude of this important part of
our operations.
The group`s Logistics operations in Europe performed well in the first half,
but the global financial crisis caused a drastic decline in logistics volumes
in the second half. Revenue in Europe in the first half was 20% higher year-on-
year, but second half revenue was 23% lower. Operating profit in the second
half declined by 45% year-on-year. The Southern African Logistics business was
less affected, as second half revenue and operating profit declined by only
12% and 2%, respectively. In the Car Rental and Tourism division, operating
profit declined by 8% in a tough year, while the Insurance division performed
well, increasing its operating profit by 39%, as underwriting profits
recovered sharply.
Cash generated by continuing operations increased by 43% to R5 187 million and
debt levels declined substantially. Net debt (excluding non-redeemable
preference shares of R441 million) amounted to R5 139 million compared to R8
451 million a year ago, a decline of 39%.
Income from associates declined by 62% to R107 million. Last year`s income
included a once-off gain of R70 million through Ukhamba Holdings from the
unbundling of Eqstra Holdings. The contribution from Ukhamba was further
affected by lower profits from its 32,4% interest in Distribution and
Warehousing Network Limited. Our share of Imperial Bank`s earnings declined by
39% to R126 million. The 49,9% held associate experienced a sharp increase in
impairment charges as a result of the weak economy, especially in the second
half. Total assets of Imperial Bank grew by 17% to R51,2 billion over the
year. The results of the Renault joint venture improved, although it is still
loss-making. The loss was not recognised in the income statement as our
investment in Renault has already been fully impaired.
Net finance charges from continuing operations increased by 14%. Against a
lower interest rate environment and lower debt levels, which had a positive
impact in the second half, the charge was negatively impacted by fair value
losses of R61 million (2008: profit R41 million) on interest rate swaps and a
lower recovery from discontinued operations compared to the prior year.
Included in HEPS for 2009 was a foreign exchange gain realised on the
repatriation of some of the capital of our European operations of 212 cents
per share (R394 million). Our offshore businesses serve as a natural hedge
against currency weakness and capital is repatriated from time to time when
the exchange rate is favourable. The gain in the prior year from the same
source amounted to R150 million.
The tax rate of 32% includes Secondary Tax on Companies, disallowable expenses
relating to goodwill impairments and the loss on the sale of Eqstra shares,
offset by exempt income and prior year over-provisions.
Significant non-trading items included in HEPS in 2008 included a foreign
exchange gain of 81 cents (R150 million), a gain through associate company
Ukhamba Holdings on the unbundling of Eqstra of 38 cents (R70 million),
impairment losses on the vendor loan to Lereko Mobility and the share trust
loan of 166 cents and 98 cents (R308 million and R182 million), respectively.
Earnings per share (EPS) amounted to 776 cents compared to a loss of 510
cents. Exceptional items recognised in EPS (but not in HEPS) in 2009 included
the profit on the disposal of Tourvest of 285 cents (R529 million), a loss of
117 cents (R217 million) on the disposal of Eqstra shares and impairment of
goodwill amounting to 105 cents (R194 million). The main contributors to the
goodwill impairment charge were Gillhuber, Laabs and Lex Commercials in the
international operations, the Imperilog group, caravan manufacturer and
distributor, Jurgens and a number of smaller entities locally. While we regard
these businesses as sound, their carrying values were adjusted in accordance
with their cash flow expectations under the current difficult economic
conditions.
EPS in the comparative period was impacted by negative fair value adjustments
on the sale of the bulk of the Aviation division of 688 cents (R1 276 million)
and 378 cents (R701 million) on the discontinuation of the commercial vehicle
assembly and distribution business, Commercial Vehicle Holdings.
Balance sheet
Net working capital declined by R1 311 million over the year to R1 887
million. This amounted to 3,6% of revenue compared to 5,7% last year.
The equity portfolio of the Insurance division was significantly reduced to
address the volatility in earnings caused by this asset class. This
contributed to a reduction in investments and loans of R1 184 million. The
levels of fixed assets, transport assets and vehicles for hire grew by less
than 10% in aggregate. We have assessed our property portfolio and believe
that the market value exceeds book value by some margin.
The ratio of net debt (excluding non-redeemable preference shares) to equity
was 50% compared to 81% last year and 75% at the interim stage. During the
year, R1 003 million and R337 million were received on the disposals of
Tourvest and the Aviation business, respectively and R227 million was received
on the disposal of Eqstra shares.
Two corporate bonds totaling R2 billion mature in August and November 2010.
Depending on market conditions, we intend to replace these bonds with longer
dated issues. The group has unutilised facilities in excess of R10 billion, of
which R4 billion are term facilities longer than one year. All outstanding
debt which matures in less than a year is adequately covered by unutilised
facilities.
Cash flow
Strong focus was placed on cash and liquidity management during the year with
great success, as evidenced by the significant reduction in net debt and the
extent of unutilised facilities. We believe that further improvement in
working capital levels will be more difficult to achieve as potential for
growth is beginning to emerge.
Cash generated by continuing operations increased by 43% to R5 187 million.
Discontinued operations contributed R566 million (2008: R2 056 million). Total
positive working capital movements contributed R1 429 million (2008: negative
R388 million) of which R408 million can be attributed to discontinued
operations.
The proceeds of the disposal of discontinued operations amounted to R1 418
million, including R1 003 million from the Tourvest disposal. R337 million was
collected on the sale of the Aviation division.
Net capital expenditure was 33% lower at R1 755 million, the reduction being
attributed to expansion capital expenditure which was R955 million lower at
R640 million. Replacement capital expenditure was maintained at R1 115 million
(2008: R1 017 million). All divisions reduced their net capital expenditure.
Expansion of the group during the year
During the year under review, the Logistics division in Southern Africa made
the following acquisitions:
60% of Tip Trans Holdings
60% of Express Hauliers
70% of Logistical Transportation Services
55% of Rustgold
50,1% of Volition Consulting Services, and
the minority shareholders in Liebentrans.
The division also strengthened its business in Zimbabwe by modernising its
fleet of 150 vehicles as business conditions improved in that country.
Imperial Logistics International acquired Hansmann, a logistics provider to
Volkswagen in Wolfsburg, Germany and Garex which provides similar services in
Poland.
The Car Rental and Tourism division acquired the businesses of U-Drive, AA
Autobay and Gage Car Hire Brokers.
The dealership division acquired Key Delta, an Opel, Isuzu and Chevrolet
franchise, as well as the minority shareholders in Beekman Canopies and
Jurgens caravans.
Imperial established a joint venture with McCarthy Motor Holdings for the
importation and distribution of Chinese manufactured vehicles, Chery and
Foton.
The Insurance division acquired the minority shareholding in SA Warranties.
Post year end event
Sale of Imperial Bank
Imperial and Nedbank Group have agreed, in principle, that Nedbank would
acquire Imperial`s 49,9% holding in Imperial Bank for a consideration of R1
775 million.
The sale will significantly enhance the cash generating capacity of the group
as the sale proceeds will be released in cash and the group will have no
further capital requirements in respect of Imperial Bank.
The group`s motor dealerships intend to establish a relationship with Nedbank
in terms of which they would participate in the promotion of vehicle finance
and share in the profit from financing and ancillary products sold through the
dealerships. Accordingly, the synergistic vehicle retailing and financial
services product range which Imperial currently offers to its customers will
continue uninterrupted.
Our investment in Imperial Bank has been classified as an associate held for
sale on the balance sheet.
Vehicle sales
In Southern Africa, the group retailed 53 241 new and 47 925 used vehicles,
respectively 35% and 19% down on last year. The decline in the total vehicle
market as well as the closure of 40 new and used car dealerships contributed
to the decline in vehicle sales. It is noteworthy that the mix of new and used
vehicles is now at a level of 1:1 which is viewed as healthy. The group
further sold 10 002 new vehicles to outside dealers as a distributor, a 40%
decrease from last year. The Australian, Swedish and United Kingdom operations
sold 10 727 new and 4 460 used vehicles, respectively 85% and 93% of last
year`s sales.
Discontinued operations
Net income from discontinued operations amounted to R508 million consisting of
trading profits of R24 million and fair value profits of R484 million largely
from the disposal of Tourvest.
Assets classified as held for sale amounted to R950 million compared to R1 478
million in December 2008 and R4 440 million in June last year. The assets held
for sale comprised of aviation assets of R703 million and R247 million of
commercial vehicle assets related to the closure of Commercial Vehicle
Holdings.
Divisional reports
Logistics
Southern African Logistics
Change Change
2009 2008 % H2 H1 %
Revenue 9 831 9 733 1,0 4 523 5 308 (14,8)
Operating profit 738 700 5,4 327 411 (20,4)
Operating margin (%) 7,5 7,2 7,2 7,7
The Southern African Logistics division did well to increase its operating
profit by 5,4% with stronger margins. Trading conditions became tough since
October last year with a general slowdown in manufacturing, mining, fuel,
commodities, construction, as well as imports and exports. However, the
distribution of fast moving consumer goods performed better, but volumes have
also declined in the second half.
In addition, the national transportation strike which persisted for nine days
during April proved to be costly.
A number of valuable new contracts were won during the year which are taking
up some of the capacity created by lower demand.
A fourth sub-division, Integration Services, has been added to the three
existing sub-divisions of Transport and Warehousing, Consumer Logistics and
Specialised Freight. The new sub-division houses fee earning asset-light
businesses which provide innovative logistics solutions to complement and
enhance the existing service offerings of the division with professional
services by leveraging skills, processes and information technology.
The fleet size increased marginally to just over 5 500 vehicles. The average
age of the truck tractor fleet is approximately 3,5 years.
Net working capital decreased by R366 million, and gross capital expenditure
was R201 million lower at R608 million.
International Logistics
Change Change
2009 2008 % H2 H1 %
Revenue 8 046 8 253 (2,5) 3 360 4 686 (28,3)
Operating profit 320 403 (20,6) 118 202 (41,6)
Operating margin 4,0 4,9 3,5 4,3
(%)
The year started well, but the global economic crisis caused a dramatic
reversal in the second half, although the business remained profitable and
managed to earn a margin of 3,5% in the second half.
The downturn in international demand for steel, industrial chemicals and
automotive products impacted on business volumes. Important customers in the
steel industry curtailed their production by the shut-down of furnaces as
scheduled maintenance programmes were brought forward.
The business responded by cutting costs aggressively.
The inland waterway shipping business, Imperial Reederei was the hardest hit
by the European recession. Fortunately, some of this decline could be absorbed
by the cancellation of short-term charters with shipping suppliers. The port
handling activities in Neska were also affected but the cost structures could
be adjusted to limit the impact. The contract logistics and steel distribution
businesses in Panopa were also affected by the downturn, but showed reasonable
resilience under the circumstances.
Due to weak trading in the road transport businesses of Gillhuber and Laabs,
goodwill on those acquisitions was impaired.
We expect the difficult trading conditions to persist for much of the new
financial year before a slow recovery starts.
Car Rental and Tourism
Change Change
2009 2008 % H2 H1 %
Revenue 2 618 2 712 (3,5) 1 281 1 337 (4,2)
Operating profit 336 365 (7,9) 173 163 6,1
Operating margin (%) 12,8 13,5 13,5 12,2
Revenue was slightly lower due to a sudden reduction in demand in the second
half, especially from foreign inbound travelers and a decline in sales at
Autopedigree. This initially caused lower fleet utilisation which was
normalised towards the end of the year. Operating income was 7,9% lower at
R336 million, but the operating margin improved in the second half.
The Europcar rebranding was successfully implemented. The loss of goodwill
associated with the old brand was more than compensated for by the raised
profile of the new brand. We are confident that Europcar will reap long-term
benefits from the spending on promotion, signage and technology which was
absorbed in the current and prior year. The low cost positioning of Tempest is
showing early signs of success.
The operating margin in the car rental business declined due to lower
utilisation rates, the cost of the rebranding to Europcar, additional
technology spend and lower used car sales at Autopedigree.
Despite a very difficult vehicle market, Autopedigree performed
satisfactorily, although revenue and operating profit were lower than last
year.
The contribution from the tourism businesses, which include Springbok Atlas,
was unchanged as lower inbound tourist numbers were partially offset by good
demand during the IPL cricket tournament and the Lions rugby tour. The coach
fleet was expanded in anticipation of the FIFA World Cup next year and future
tourism opportunities.
The acquisition of U-Drive, a van rental business made a positive contribution
to profits.
Distributorships
Change Change
2009 2008 % H2 H1 %
Revenue 13 112 15 056 (12,9) 6 051 7 061 (14,3)
Operating profit 491 744 (34,0) 309 182 69,8
Operating margin (%) 3,7 4,9 5,1 2,6
Associated Motor Holdings (AMH) responded effectively to the extremely weak
motor market by cutting costs and closing unprofitable operations in the last
quarter of 2008. Margins in the second half for the division as a whole
recovered well, while revenue was lower than the first half.
New car sales volumes in AMH declined by slightly more than the market as the
entry level products were worst affected by difficulty in obtaining bank
credit. Any increase in risk appetite by banks will benefit this sub-segment.
Dealership closures cost approximately R30 million resulting in annualised
savings in excess of R100 million. This rationalisation will position the
business correctly for a vehicle market which is likely to remain weak for the
foreseeable future. Currency fluctuations throughout the period had a marked
impact on results. The Rand was weak during most of the period, which was
partly offset by price increases and some manufacturer assistance. However,
benefits from the recent strengthening of the Rand have already started to
flow.
In line with our stated strategy of focusing on service operations, the
division held its revenue from services at R1 214 million against R1 286
million last year while total revenue declined by 13%.
The Australian dealerships made a net profit after interest, even without a
once-off VAT recovery of R25 million realised in the first half.
NAC posted good results, as aircraft sales were maintained and other
activities contributed well. However, the forward order book is lower, which
will put pressure on next year`s results. As the leading general aviation
sales organisation in Africa, NAC benefits from some stability in demand from
African governmental agencies.
The auto parts business improved strongly over last year and returned solid
results.
Dealerships
Change Change
2009 2008 % H2 H1 %
Revenue 16 691 19 181 (13,0) 7 195 9 496 (24,2)
Operating profit 279 423 (34,0) 128 151 (15,2)
Operating margin (%) 1,7 2,2 1,8 1,6
It has been an extremely difficult year for vehicle sales, especially the
second half. During this half, the total market declined by 34%, while the
commercial vehicle market declined by 49%. Unit sales of passenger and light
commercial vehicles in the division declined by more than the total market as
a result of dealership closures, but the division outperformed the market in
medium to extra heavy commercial vehicles. Revenue from the rendering of
services increased by 8% amidst a decline of 13% in total revenue.
We view the operating margin of 1,7% as acceptable under the circumstances.
The main driver behind the recent slump in vehicle sales has been reduced
lending by vehicle finance banks and, to a lesser extent, reduced demand. The
recent rate cuts have not provided much relief, as banks have increased their
lending margins to compensate for liquidity constraints and to price correctly
for the risk following increased credit losses in their vehicle finance books.
The LDV franchise has been closed in the UK as a result of the insolvency of
the LDV manufacturer. No further impairment charges are required. Operating
profit from the DAF truck dealerships in the UK and the Nissan dealerships in
Sweden has declined by 59% to R29 million. Trading conditions in the DAF
franchise in the UK are expected to remain tough for the foreseeable future.
Jurgens was under pressure due to a significant decline in consumer spending
on leisure items, whilst Beekman Canopies performed very well in a market
where light commercial sales were significantly down.
Insurance
Change Change
2009 2008 % H2 H1 %
Revenue 2 847 2 594 9,8 1 393 1 454 (4,2)
Investment income 140 182 (23,1) 133 7
including fair value
adjustments (gross)
Underwriting and other 175 45 288,9 105 70 50,0
Operating profit 315 227 38,8 238 77 209,1
Underwriting margin (%) 6,1 1,7 7,5 4,8
Gross premium income, increased by 10%. Strong contributors to the increase
were the Botswana life and short-term operations as well as the heavy
commercial vehicles insurance operations where our share of the market
increased. The depressed motor vehicle market resulted in lower premium income
in the motor comprehensive and motor related credit life products.
The operational merger of Regent Insurance and Regent Life has been completed
and annualised savings of R35 million are estimated to have been achieved. A
new chief executive officer, David Gnodde, has been appointed for the combined
insurance division.
A combined underwriting result of R175 million was achieved, nearly four times
better than last year. The Botswana operations contributed well, although the
credit life business in Botswana will reduce in 2010 due to the loss of a
large account. The short-term business in Botswana should remain strong.
Underwriting results in South Africa from motor comprehensive business
remained weak in line with the market, but was adequately compensated for by
results from the credit shortfall, heavy commercial vehicles and warranty
products.
Underwriting income was substantially higher in the second half following the
actuarial review and release of approximately R57 million of life assurance
reserves held at December 2008. The reduced expense base as a result of the
merger of Regent Life and Regent Insurance contributed to the release, as did
the changes in economic and experience assumptions. The balance of growth
arose from cell captive business consolidated in the second half and an
improvement in salvage and recoveries from third parties.
Subsequent to the introduction of cell captives in January we have now
accounted for our external partners` share of such profits as income
attributable to minorities. The positive impact on operating profits due to
this was R30 million in the second half.
The overall investment return for the year was disappointing due to large fair
value adjustments in the equities portfolio in the first half. Investment
income, including fair value losses, was 23% lower than last year. The
equities portfolio was reduced to 17% of total investible funds during the
year. If a long-term investment return of 11,5% was applied to the portfolio,
our return on embedded value would have exceeded 25% in both companies.
We invested a further R250 million of capital into the Regent group, bringing
the short-term solvency margin to 47% and life capital adequacy ratio to 2,9
times at year-end. The measures are well above regulatory minimum levels.
Skills development
The training centre in Germiston for petrol and diesel mechanics was completed
at a cost of R24 million and was opened during the year. The centre is aligned
to the MERSETA, and has capacity to train 640 apprentices per year, together
with existing facilities in the group. Quality standards in the group`s
dealerships will be maintained through this training initiative and it
contributes to addressing the national skills shortage in this area.
Management development programmes with a strong focus on black management
development have commenced in all divisions.
Corporate Social Investment
The Imperial Ukhamba Community Development Trust supports three schools in
under-privileged parts of Gauteng and has spent over R11 million at these
schools since its inception. The projects have achieved significant progress
in terms of numeracy and support 3 500 learners in terms of curriculum
development, textbooks, teacher training and the construction of much needed
infrastructure.
Dividend
A final ordinary dividend of 120 cents per share has been declared, which
brings the total ordinary dividend for the year to 200 cents per share.
Strategic intentions
Through the recent restructuring of the group, we succeeded in strengthening
the balance sheet and management can now focus on expansion into our chosen
focus areas. These areas are logistics, tourism and selected aspects of
financial services which are aligned to our current business. The appointment
of Moeketsi Mosola, the former CEO of SA Tourism is evidence of our intentions
to build on our current tourism interests in a variety of ways.
Internationally, our expansion will be aligned to Imperial Logistics
International. Opportunities in Europe in the current depressed economies in
the region are beginning to emerge.
The strategy to limit the group`s relative exposure to the motor retailing
industry continues. Far reaching steps have been taken to right-size our motor
operations in line with our expectations for motor vehicle demand and our
requirements for return on capital.
Prospects
The Southern African logistics industry should remain under pressure for most
of the 2010 financial year, although business activity is adequate for the
division to deliver satisfactory returns.
Conditions in Europe remain tough. However, the rise in commodity prices
indicates growing demand by global manufacturers which would increase activity
in Imperial Logistics International. We expect that some important customers
in the steel industry will re-commission furnaces, which were prematurely
closed for scheduled maintenance, later in the financial year. When this
happens, it will contribute to higher volumes in the in-and outbound logistics
operations which we conduct for them.
The Car Rental and Tourism division is currently operating on a low base from
a weak international inbound tourism market and a slowdown in business travel.
Whilst we expect a slow but sure recovery in these markets, the FIFA World Cup
will provide a further stimulus to the division in the first part of 2010.
However, we will not build significant capacity for this event alone, although
higher utilisation and better margins are expected.
While our motor vehicle retailing divisions have started to benefit from cost
savings, we expect vehicle sales to remain weak in the year ahead.
Underwriting results will be maintained in our insurance operations and
investment results are expected to improve. The lower equity content in the
portfolios will provide more stability to the performance of this division.
While early signs of improvement in global economies are beginning to emerge,
business conditions in all our markets are still tough. Our strong balance
sheet and rebalanced portfolio of businesses position us well in the current
market.
By order of the board
T Gcabashe, Chairman
H Brody, Chief Executive
AH Mahomed, Financial Director
Declaration of Dividends
Preference shareholders and ordinary shareholders
Notice is hereby given that:
a preference dividend of 494,795 cents per preference share has been declared
payable to holders of non-redeemable, non-participating preference shares; and
an ordinary dividend in an amount of 120 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:
2009
Last day for preference shares and Thursday, 17 September
ordinary shares respectively to trade cum
preference dividend and cum ordinary
dividend
Preference and ordinary shares commence Friday, 18 September
trading ex preference dividend and ex
ordinary dividend respectively
Record date Friday, 25 September
Payment date Monday, 28 September
Share certificates may not be dematerialised/rematerialised between Friday, 18
September 2009 and Friday, 25 September 2009, both days inclusive.
On Monday, 28 September 2009, 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 28 September 2009 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, 28
September 2009.
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 Wednesday, 23 September 2009.
On Friday, 25 September 2009 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
25 August 2009
CONDENSED INCOME STATEMENT
Audited Audited
2009 2008 %
for the year ended 30 June Rm Rm change
Continuing operations
Revenue 52 219 55 927 (7)
Net operating expenses (48 454) (51 849)
Profit from operations before 3 765 4 078
depreciation and recoupments
Depreciation, amortisation and (1 312) (1 155)
recoupments
Operating profit 2 453 2 923 (16)
Recoupments from sale of properties 75 69
Foreign exchange gains 400 145
Fair value (losses) gains on foreign (8) 1
exchange derivatives
Fair value losses on other financial (496)
instruments
Exceptional items (431) 1
Profit before net financing costs 2 489 2 643 (6)
Net finance cost including fair (923) (807)
value gains and losses
Income from associates and joint 107 278
ventures
Profit before taxation 1 673 2 114 (21)
Income tax expense 502 707
Profit from continuing operations 1 171 1 407 (17)
Discontinued operations 508 (1 920)
- Trading profit from operations 24 349
- Fair value profit (loss) on 484 (2 269)
discontinuation
Net profit (loss) for the year 1 679 (513)
Attributable to:
Equity holders of Imperial Holdings 1 518 (870)
Limited
Minority interest - continuing 160 162
operations
Minority interest - discontinued 1 195
operations
1 679 (513)
Earnings per share* Cents Cents
Ordinary shares
- Basic
Total 776 (510)
Discontinued operations 273 (1 139)
Continuing operations 503 629 (20)
- Diluted
Total 730 (420)
Discontinued operations 244 (1 020)
Continuing operations 486 600 (19)
Headline earnings per share*
- Basic
Total 715 718
Discontinued operations 17 103
Continuing operations 698 615 13
- Diluted
Total 675 680
Discontinued operations 15 92
Continuing operations 660 588 12
* Based on weighted average number
of shares in issue for the period
Headline earnings reconciliation - Rm Rm
continuing and discontinued
operations
Attributable profit (loss) 1 518 (870)
Attributable to preferred ordinary (78) (78)
shareholders
Attributable to ordinary 1 440 (948)
shareholders
Profit on sale of property, plant (71) (24)
and equipment
(Impairment reversal) impairment of (8) 5
assets
Exceptional items - continuing 431 (1)
operations
Exceptional items - included in 4 6
income from associates and joint
ventures
Exceptional items - discontinued (571) 2 605
operations
Taxation 104 (310)
Minority interest (2)
Headline earnings - basic 1 327 1 333
Attributable to preferred ordinary 78 78
shareholders
Headline earnings - diluted 1 405 1 411
Preferred ordinary shares
- Basic (cents) 535 535
Additional information
Net asset value per share (cents) 4 820 4 732
Number of ordinary shares (million)
- in issue 188 188
- weighted average 186 186
- weighted average for diluted 208 207
earnings
Number of other shares in issue
(million)
- Preferred ordinary 15 15
- Deferred ordinary 17 17
Net finance cost Rm Rm
Net interest paid 862 848
Foreign exchange (gain) loss on (216) 376
monetary items
Fair value loss (gains) on interest 277 (417)
swaps
Net finance cost - continuing 923 807
operations
Net finance cost - discontinued 99 660
operations
Exceptional items - continuing Rm Rm
operations
Impairment of goodwill (194) (47)
(Loss) profit on disposal of (20) 48
subsidiaries, associates and joint
ventures
Loss on sale of Eqstra Holdings (217)
Limited shares
(431) 1
Exceptional items - discontinued Rm Rm
operations
Profit on sale of Tourvest 575
Fair value loss on Aviation disposal (4) (1 341)
group
Fair value loss on CVH disposal (972)
group
Net loss on sale of subsidiaries (292)
Taxation (87) 336
484 (2 269)
CONDENSED BALANCE SHEET
Audited Audited
2009 2008
at 30 June Rm Rm
ASSETS
Intangible assets 901 897
Investments in associates and joint ventures 790 2 017
Property, plant and equipment 5 976 5 681
Transport fleet 3 483 3 465
Leasing assets 337
Vehicles for hire 1 653 1 286
Deferred tax assets 645 637
Other investments and loans 1 136 2 320
Other non-current financial assets 203 330
Inventories 5 592 6 442
Taxation in advance 154 111
Trade and other receivables 5 633 6 821
Cash resources 4 655 3 148
Assets classified as held for sale 950 4 440
Associate classified as held for sale 1 544
Total assets 33 315 37 932
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 10 10
Shares repurchased (1 816) (1 816)
Other reserves 280 1 273
Retained earnings 11 300 10 138
Attributable to Imperial Holdings` 9 774 9 605
shareholders
Minority interest 587 811
Total shareholders` equity 10 361 10 416
Liabilities
Non-redeemable, non-participating preference 441 441
shares
Retirement benefit obligations 256 286
Interest-bearing borrowings 9 794 11 599
Insurance and investment contracts 1 356 1 535
Deferred tax liabilities 652 549
Other non-current financial liabilities 157 98
Trade and other payables and provisions 9 338 10 065
Current tax liabilities 501 586
Liabilities directly associated with assets 459 2 357
classified as held for sale
Total liabilities 22 954 27 516
Total equity and liabilities 33 315 37 932
Capital commitments 544 509
Contingent liabilities 256 595
CONDENSED CASH FLOW STATEMENT
Audited Audited
2009 2008
for the year ended 30 June Rm Rm
Cash flows from operating activities
Cash generated by operations before movements 4 324 6 077
in working capital
Net working capital movements 1 429 (388)
Cash generated by operations 5 753 5 689
Cash generated by operations - continuing 5 187 3 633
businesses
Cash generated by operations - discontinued 566 2 056
businesses
Net financing costs (961) (1 426)
Taxation paid (739) (1 396)
4 053 2 867
Cash flows from investing activities
Proceeds (expenditure) from discontinued 1 418 3 123
operations
- Sale of Tourvest 1 003
- Sale of Safair Lease Finance 337
- Net capital proceeds (expenditure) 78 (2 384)
- Net unbundling and disposal of 5 507
subsidiaries and businesses
Net expenditure from continuing operations
- Net acquisition of subsidiaries and (340) (135)
businesses
- Expansion capital expenditure (640) (1 595)
- Net replacement capital expenditure (1 115) (1 017)
- Investments, equities and loans 741 680
64 1 056
Cash flows from financing activities
Hedge cost premium paid (137) (67)
Dividends paid, capital distributions and (765) (842)
share buy backs
Decrease in long-term borrowings (137) (1 165)
Change in minority interest (107)
(1 146) (2 074)
Net increase in cash and cash equivalents 2 971 1 849
Cash and cash equivalents at beginning of (340) (2 189)
year
Cash and cash equivalents at end of year 2 631 (340)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share capital Shares Other
and premium repurchased reserves
for the year ended 30 June Rm Rm Rm
Balance at 30 June 10 (1 816) 1 273
Net (losses) gains arising (552)
on translation of foreign
operations
Transferred to translation 5
reserve
Movement in hedge (141)
accounting reserve
Realisation of reserves on 121
disposal of assets
Transfer of reserves on (261)
disposal of assets
Revaluation of investment
in Eqstra Holdings Limited
Devaluation of Lereko (6)
Mobility call option
Share option hedging cost (137)
Net (losses) profits not (971)
recognised in the income
statement
Net attributable profit
(loss) for the year
Minority share of
attributable profits
Net (decrease) increase in
minority interest
Contingency and other (77)
statutory reserves
Deconsolidation of Lereko
Mobility
Unbundling of the Leasing
and Capital Equipment
division
Movement in share-based 55
equity
Purchase of ordinary
shares
Share issue expenses
Dividends and capital
distributions
Minority share of
dividends
Balance at 30 June 10 (1 816) 280
Retained Minority Audited
earnings interest 2009
for the year ended 30 June Rm Rm Rm
Balance at 30 June 10 138 811 10 416
Net (losses) gains arising (14) (566)
on translation of foreign
operations
Transferred to translation (5)
reserve
Movement in hedge (22) (163)
accounting reserve
Realisation of reserves on 121
disposal of assets
Transfer of reserves on 261
disposal of assets
Revaluation of investment
in Eqstra Holdings Limited
Devaluation of Lereko (6)
Mobility call option
Share option hedging cost (137)
Net (losses) profits not 256 (36) (751)
recognised in the income
statement
Net attributable profit 1 518 1 518
(loss) for the year
Minority share of 161 161
attributable profits
Net (decrease) increase in (273) (273)
minority interest
Contingency and other 77
statutory reserves
Deconsolidation of Lereko
Mobility
Unbundling of the Leasing
and Capital Equipment
division
Movement in share-based 55
equity
Purchase of ordinary
shares
Share issue expenses
Dividends and capital (689) (689)
distributions
Minority share of (76) (76)
dividends
Balance at 30 June 11 300 587 10 361
Audited Audited
2008 2007
for the year ended 30 June Rm Rm
Balance at 30 June 13 467 10 787
Net (losses) gains arising 234 143
on translation of foreign
operations
Transferred to translation
reserve
Movement in hedge 30 (646)
accounting reserve
Realisation of reserves on
disposal of assets
Transfer of reserves on
disposal of assets
Revaluation of investment 167
in Eqstra Holdings Limited
Devaluation of Lereko (238)
Mobility call option
Share option hedging cost (62) (66)
Net (losses) profits not 131 (569)
recognised in the income
statement
Net attributable profit (870) 3 154
(loss) for the year
Minority share of 357
attributable profits
Net (decrease) increase in 25
minority interest
Contingency and other
statutory reserves
Deconsolidation of Lereko 1 558
Mobility
Unbundling of the Leasing (1 722)
and Capital Equipment
division
Movement in share-based (5)
equity
Purchase of ordinary (109) (298)
shares
Share issue expenses (1)
Dividends and capital (607) (1 024)
distributions
Minority share of (225) (166)
dividends
Balance at 30 June 10 416 13 467
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Discontinued operations
The following have been identified as disposal groups:
- Aviation division, excluding NAC, sale concluded in December 2008
- Assets of Commercial Vehicle Holdings (CVH) are being realised
- Tourvest, a previously JSE-listed entity, was disposed of in September 2008
- Leasing and Capital Equipment division, was unbundled in May 2008
- Imperial Multiparts (UK), was disposed of 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 cost basis excluding
financial instruments which are fair valued and conform to International
Financial Reporting Standards (IFRS). This condensed consolidated 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 30 June 2008.
Restatement of comparatives
The operating profit has been restated to exclude recoupments on the sale of
properties. It is now disclosed separately.
Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 June 2009. 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
A non-binding agreement has been reached to sell our 49,9% interest in
Imperial Bank Limited to Nedbank Limited. Consequently the interest is
classified on the balance sheet as associate held for sale.
There have been no other material events since year-end that require further
disclosure.
MATERIAL ACQUISITION
The group did not make any individual acquisitions that are considered
material to the group results. The following amounts are disclosed:
Purchase Fair value of net
consideration assets acquired Goodwill
Rm Rm Rm
Total of all material 263 148 115
acquisitions
Contribution since acquisition
Revenue Profit before tax
Rm Rm
Total of all material 564 48
acquisitions
CORPORATE INFORMATION
Non-executive directors
TS Gcabashe (Chairman), S Engelbrecht, P Langeni,MJ Leeming,
JR McAlpine, MV Moosa, RJA Sparks,A Tugendhaft (Deputy Chairman), Y Waja
Executive directors
HR Brody (Chief Executive), OS Arbee, MP de Canha,RL Hiemstra,
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 (Pty) 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
The segment report is contained on the Imperial Holdings Website:
www.imperial.co.za
Date: 26/08/2009 07:05:02 Produced by the JSE SENS Department.
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