| Tue 19 Oct 2010, 12:00 | | CMH - Combined Motor Holdings Limited - Unaudited results for the six months |
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CMH
CMH
CMH - Combined Motor Holdings Limited - Unaudited results for the six months
ended 31 August 2010
Combined Motor Holdings Limited
(Registration number: 1965/000270/06)
(Share code: CMH ISIN: ZAE000088050)
(`the Company` or `the Group`)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
GROUP FINANCIAL HIGHLIGHTS
Revenue up 23%
Total profit and comprehensive income up 158%
Earnings per share up 137%
Dividend payable 13 cents per share
Cash resources R214 million
ABRIDGED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
Change 2010 2009 2010
% R`000 R`000 R`000
Revenue 23 3 604 580 2 929 957 6 507 518
Cost of sales 25 (3 063 074) (2 456 226) (5 390 828)
Gross profit 14 541 506 473 731 1 116 690
Other income 1 500 1 500 3 000
Impairment of goodwill - - (33 029)
Selling and
administration expenses 5 (461 669) (440 377) (978 558)
Operating profit 133 81 337 34 854 108 103
Finance income (26) 4 820 6 539 16 458
Finance costs 15 (20 007) (17 351) (34 192)
Profit before taxation 175 66 150 24 042 90 369
Taxation expense 219 (21 830) (6 840) (35 586)
Total profit and
comprehensive income 158 44 320 17 202 54 783
Attributable to:
Equity holders of the
Company 136 41 667 17 620 54 439
Minority interest (735) 2 653 (418) 344
158 44 320 17 202 54 783
Reconciliation of
headline earnings
Total profit and
comprehensive income 44 320 17 202 54 783
Non-trading items
- impairment of goodwill - - 33 029
Headline earnings 158 44 320 17 202 87 812
Attributable to:
Equity holders of the
Company 41 667 17 620 82 514
Minority interest 2 653 (418) 5 298
44 320 17 202 87 812
Earnings per share
Basic (cents) 137 38,6 16,3 50,6
Diluted basic (cents) 136 38,5 16,3 49,8
Headline (cents) 137 38,6 16,3 76,7
Diluted headline (cents) 136 38,5 16,3 75,5
ABRIDGED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Operating profit adjusted for non-cash
items 138 506 80 365 226 790
Sale of car hire fleet vehicles 149 383 179 297 294 717
Purchase of car hire fleet vehicles (118 838) (81 078) (389 613)
Working capital changes:
Movement in inventory (11 319) 35 797 37 835
Movement in trade and other receivables (91 079) (17 985) (12 003)
Movement in trade and other payables 3 534 (161 762) 17 381
Cash generated from operations 70 187 34 634 175 107
Finance income 4 820 6 539 16 458
Finance costs (20 007) (17 351) (34 192)
Dividends paid (33 071) - (6 457)
Taxation paid (24 980) (8 610) (37 309)
Net cash movement from operating
activities (3 051) 15 212 113 607
Net cash movement from investing
activities (22 320) (14 362) (34 234)
Net cash movement from financing
activities (13 935) (21 020) (38 284)
Net movement in cash and cash
equivalents (39 306) (20 170) 41 089
Cash and cash equivalents at beginning
of period 253 079 211 990 211 990
Cash and cash equivalents at end of
period 213 773 191 820 253 079
ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Assets
Non-current assets
Plant and equipment 64 887 68 940 64 493
Goodwill 89 972 123 001 89 972
Investments 176 037 156 839 166 037
Deferred taxation 51 408 45 831 49 896
382 304 394 611 370 398
Current assets
Car hire fleet vehicles 371 063 275 460 442 804
Inventory 731 433 722 150 720 114
Trade and other receivables 299 417 217 000 208 338
Tax paid in advance 5 424 8 814 10 434
Cash and cash equivalents 213 773 191 820 253 079
1 621 110 1 415 244 1 634 769
Total assets 2 003 414 1 809 855 2 005 167
Equity and liabilities
Capital and reserves
Share capital and reserves 522 241 469 657 500 764
Minority interest (9 615) (851) (818)
Total equity 512 626 468 806 499 946
Non-current liabilities
Advance from minority shareholders 158 414 203 964 189 743
Interest-bearing borrowings 201 3 446 976
Assurance funds 13 670 14 680 14 766
Lease liabilities 103 479 96 813 98 079
275 764 318 903 303 564
Current liabilities
Advance from minority shareholders 36 108 21 080 19 201
Interest-bearing borrowings 1 766 3 081 2 193
Trade and other payables 1 177 150 997 985 1 173 616
Current tax liabilities - - 6 647
1 215 024 1 022 146 1 201 657
Total liabilities 1 490 788 1 341 049 1 505 221
Total equity and liabilities 2 003 414 1 809 855 2 005 167
Net asset value per share (cents) 475 436 465
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 2009 20 509 5 896 6 186 419 314
Total profit and
comprehensive income 17 620
Share-based payment
reserve 132
At 31 August 2009 20 509 5 896 6 318 436 934
Issue of shares 614
Total profit and
comprehensive income 36 819
Dividends paid (6 457)
Share-based payment reserve 131
Purchase of minority
interest
At 28 February 2010 21 123 5 896 6 449 467 296
Issue of shares 1 689
Total profit and
comprehensive income 41 667
Share-based payment reserve 768
Dividends paid (22 647)
Purchase of minority
interest
At 31 August 2010 22 812 5 896 7 217 486 316
Attributable
to equity
holders of Minority Total
the Company interest equity
R`000 R`000 R`000
At 28 February 2009 451 905 (433) 451 472
Total profit and comprehensive income 17 620 (418) 17 202
Share-based payment reserve 132 132
At 31 August 2009 469 657 (851) 468 806
Issue of shares 614 614
Total profit and comprehensive income 36 819 762 37 581
Dividends paid (6 457) (6 457)
Share-based payment reserve 131 131
Purchase of minority interest (729) (729)
At 28 February 2010 500 764 (818) 499 946
Issue of shares 1 689 1 689
Total profit and comprehensive income 41 667 2 653 44 320
Share-based payment reserve 768 768
Dividends paid (22 647) (10 424) (33 071)
Purchase of minority interest (1 026) (1 026)
At 31 August 2010 522 241 (9 615) 512 626
SEGMENTAL ANALYSIS
Total Retail motor
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Revenue 3 604 580 2 929 957 3 386 602 2 736 181
Operating profit 81 337 34 854 72 463 38 055
Net finance costs (15 187) (10 812) (26 411) (21 124)
Profit before taxation 66 150 24 042 46 052 16 931
Total assets 2 003 414 1 809 855 1 112 029 1 025 948
Total liabilities 1 490 788 1 341 049 805 782 736 029
Goodwill 89 972 123 001 84 972 98 001
Car hire Marine and leisure
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Revenue 141 601 116 170 50 325 55 673
Operating profit 17 234 4 082 (1 269) (6 061)
Net finance costs (7) - (1 001) (2 243)
Profit before taxation 17 227 4 082 (2 270) (8 304)
Total assets 453 996 315 369 68 053 108 484
Total liabilities 440 341 333 985 14 300 22 573
Goodwill - - 5 000 25 000
Financial services Corporate services
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Revenue 6 058 2 398 19 994 19 535
Operating profit 3 555 203 (10 646) (1 425)
Net finance costs 319 854 11 913 11 701
Profit before taxation 3 874 1 057 1 267 10 276
Total assets 13 693 27 907 355 643 332 147
Total liabilities 14 011 15 242 216 354 233 220
Goodwill - - - -
COMMENTARY ON RESULTS
Backed by a much-improved performance from its retail motor and car hire
divisions, the Group achieved pleasing results for the six months to 31 August
2010.
A 23% increase in revenue yielded a 14% increase in gross profit. Selling and
administration expenses were held at a 5% increase, mainly variable expenses
aligned to gross profit, with the result that operating profit rose 133%. Net
finance costs increased marginally as the more favourable trading conditions
demanded a greater investment in working capital. The higher tax rate payable
reflects the impact of secondary taxation on companies as the Group resumed
dividend payments.
The net result is that the Group achieved a 137% increase in earnings and
headline earnings per share.
Retail motor
More favourable trading conditions, underpinned by reduced interest rates,
yielded a 172% improvement in pre-tax profit. The Group`s new and used vehicle
sales levels increased marginally above the national averages.
The workshops and parts departments recorded steady progress.
Car hire
Aided by improved sales penetration, falling interest rates and firmer used
vehicle prices, this division achieved outstanding results. A noteworthy aspect
is the fact that very little of the 322% pre-tax profit increase is attributable
to the volume spike during the 2010 World Cup.
Marine and leisure
The cost-cutting and restructuring efforts undertaken by management over the
past two years have helped this division to substantially reduce its operating
losses. As it serves principally the luxury segment of the market, it was always
recognised that the return to profitability would lag behind the retail motor
sector. Nevertheless, further improvement is expected during the next six
months.
Financial services
Good results emanated from the Group`s joint ventures with finance houses and
insurance cells.
Share incentive scheme
At the recent annual general meeting, shareholders approved the adoption of a
share incentive scheme to help reward and retain key management. The scheme is
designed for the younger generation who will lead the Group over the next
decade. The remuneration committee has approved the award of 3,3 million share
appreciation rights with effect from 1 June 2010, at a price of R10,31 per
right. The rights are convertible into actual shares in equal instalments after
3, 4 and 5 years of service. The resulting number of shares which will be
awarded is directly linked to the increase in the share price over the
respective periods.
Prospects
Continued improvement, albeit at a lesser rate, is expected during the medium
term. The stronger currency has helped retard vehicle price increases, the
success of the World Cup has boosted tourism and consumer confidence, and lower
interest rates have reduced the burden on overindebted consumers.
The Group is in a sound financial position, has strong cash generation, and is
well-positioned to take advantage of the expected modest improvement in
operating conditions.
Dividend
A dividend (dividend number 45) of 13 cents per share will be paid on Monday, 13
December 2010 to members reflected in the share register of the Company at the
close of business on the record date, Friday, 10 December 2010. Last day to
trade `cum` dividend is Friday, 3 December 2010. First day to trade `ex`
dividend is Monday, 6 December 2010. Share certificates may not be
dematerialised or rematerialised from Monday, 6 December 2010 to Friday, 10
December 2010, both days inclusive. The total value payable is R14 043 250.
Secondary taxation on companies of R1 404 325 will be charged on this dividend.
Basis of preparation
The results of the Group for the six months ended 31 August 2010 have been
prepared in accordance with IAS 34: Interim Financial Reporting, International
Financial Reporting Standards, the AC 500 Standards as issued by the Accounting
Practices Board, the Listings Requirements of the JSE Limited and Schedule 4 of
the Companies Act of South Africa 1973. 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 2010.
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.
Management is reviewing its level of compliance with the King III Report, and a
full report will be tabled in the year end Annual Report.
The results have not been audited or reviewed by the Group`s external auditors.
By order of the board of directors
K FONSECA CA(SA)
Company Secretary
19 October 2010
REGISTERED OFFICE
1 Wilton Crescent, Umhlanga Ridge, 4319
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
PO Box 61051, Marshalltown, 2107
SPONSOR
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Private Bag X36, Sunninghill, 2157
DIRECTORS
M Zimmerman (Chairman), JD McIntosh (CEO), LCZ Cele, MPD Conway,
JS Dixon (effective 15 October 2010), JTM Edwards, SK Jackson, VP Khanyile,
MH Shelembe, JW Alderslade (alternate)
www.cmh.co.za
Date: 19/10/2010 12:00:02 Produced by the JSE SENS Department.
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