| Tue 19 Apr 2011, 12:00 | | CMH - Combined Motor Holdings Limited - Audited results for the year ended |
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CMH
CMH
CMH - Combined Motor Holdings Limited - Audited results for the year ended
28 February 2011
Combined Motor Holdings Limited
(Registration number: 1965/000270/06)
(Share code: CMH ISIN: ZAE000088050)
("the Company" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011
Group financial highlights
Audited Audited
Change 28 February 28 February
% 2011 2010
Revenue (R`000) 13 7 362 224 6 507 518
Operating profit (R`000) 85 199 992 108 103
Total profit and
comprehensive income (R`000) 138 130 336 54 783
Earnings per share (cents) 120 111,2 50,6
Diluted earnings per share (cents) 119 109,2 49,8
Headline earnings per share (cents) 45 111,3 76,7
Diluted headline earnings
per share (cents) 45 109,3 75,5
Dividend declared - payable
June 2011 (cents) 43 30,0 21,0
Total assets (R`000) 9 2 176 761 2 005 167
Year-end cash resources (R`000) 24 312 588 253 079
Abridged Group statement of comprehensive income
Audited Audited
28 February 28 February
Change 2011 2010
% R`000 R`000
Revenue 13 7 362 224 6 507 518
Cost of sales (6 075 026) (5 390 828)
Gross profit 15 1 287 198 1 116 690
Other operating income 3 000 3 000
Impairment of goodwill (167) (33 029)
Selling and administration expenses 11 (1 090 039) (978 558)
Operating profit 85 199 992 108 103
Finance income 12 831 16 458
Finance costs (32 348) (34 192)
Profit before taxation 100 180 475 90 369
Taxation 41 (50 139) (35 586)
Total profit and comprehensive income 138 130 336 54 783
Attributable to:
Equity holders of the Company 120 031 54 439
Non-controlling shareholders of
subsidiaries 10 305 344
130 336 54 783
Reconciliation of headline earnings
Total profit and comprehensive income 130 336 54 783
Non-trading items
- impairment of goodwill 167 33 029
Headline earnings 130 503 87 812
Attributable to:
Equity holders of the Company 46 120 173 82 514
Non-controlling shareholders of
subsidiaries 10 330 5 298
130 503 87 812
Earnings per share (cents)
Basic 111,2 50,6
Diluted basic 109,2 49,8
Headline 111,3 76,7
Diluted headline 109,3 75,5
Abridged Group statement of cash flows
Audited Audited
28 February 28 February
2011 2010
R`000 R`000
Operating profit adjusted for non-cash items 292 161 226 790
Sale of car hire fleet vehicles 306 238 294 717
Purchase of car hire fleet vehicles (336 536) (389 613)
Working capital changes:
Movement in inventory (105 087) 37 835
Movement in trade and other receivables (21 593) (12 003)
Movement in trade and other payables 113 607 17 381
Cash generated from operations 248 790 175 107
Finance income received 12 831 16 458
Finance costs paid (32 348) (34 192)
Dividends paid (36 703) (6 457)
Taxation paid (49 784) (37 309)
Cash flow from operating activities 142 786 113 607
Cash flow from investing activities (39 935) (34 234)
Cash flow from financing activities (43 342) (38 284)
Net cash flow for year 59 509 41 089
Cash and cash equivalents at beginning of year 253 079 211 990
Cash and cash equivalents at end of year 312 588 253 079
Abridged Group statement of financial position
Audited Audited
28 February 28 February
2011 2010
R`000 R`000
Assets
Non-current assets
Plant and equipment 58 565 64 493
Goodwill 89 972 89 972
Investments 187 271 166 037
Deferred taxation 55 287 49 896
391 095 370 398
Current assets
Car hire fleet vehicles 415 636 442 804
Inventory 825 201 720 114
Trade and other receivables 229 931 208 338
Tax paid in advance 2 310 10 434
Cash and cash equivalents 312 588 253 079
1 785 666 1 634 769
Total assets 2 176 761 2 005 167
Equity and liabilities
Capital and reserves
Share capital and reserves 588 572 500 764
Non-controlling interest (2 563) (818)
Total equity 586 009 499 946
Non-current liabilities
Advance from non-controlling shareholders of
subsidiaries 144 073 189 743
Interest-bearing borrowings - 976
Assurance funds 13 137 14 766
Lease liabilities 110 176 98 079
267 386 303 564
Current liabilities
Advance from non-controlling shareholders of
subsidiaries 32 089 19 201
Interest-bearing borrowings 986 2 193
Trade and other payables 1 286 022 1 173 616
Current tax liabilities 4 269 6 647
1 323 366 1 201 657
Total equity and liabilities 2 176 761 2 005 167
Net asset value per share (cents) 542 465
Group statement of changes in equity
Non-
distributable Share-based
Share capital reserve payment reserve Retained earnings
R`000 R`000 R`000 R`000
At 28 February 2009 20 509 5 896 6 186 419 314
Issue of shares 614
Total profit and
comprehensive income 54 439
Dividends paid (6 457)
Share-based payment
reserve 263
Purchase of non-
controlling interest
in subsidiaries
At 28 February 2010 21 123 5 896 6 449 467 296
Issue of shares 2 179
Transfer to share
capital 1 711 (1 711)
Total profit and
comprehensive income 120 031
Dividends paid (36 703)
Share-based payment
reserve 2 301
Purchase of non-
controlling interest
in subsidiaries
At 28 February 2011 25 013 5 896 7 039 550 624
Attributable
to equity holders Non-controlling
of the Company interest Total equity
R`000 R`000 R`000
At 28 February 2009 451 905 (433) 451 472
Issue of shares 614 614
Total profit and
comprehensive income 54 439 344 54 783
Dividends paid (6 457) (6 457)
Share-based payment
reserve 263 263
Purchase of
non-controlling
interest in
subsidiaries (729) (729)
At 28 February 2010 500 764 (818) 499 946
Issue of shares 2 179 2 179
Transfer to share
capital - -
Total profit and
comprehensive income 120 031 10 305 130 336
Dividends paid (36 703) (10 556) (47 259)
Share-based payment
reserve 2 301 2 301
Purchase of
non-controlling
interest in
subsidiaries (1 494) (1 494)
At 28 February 2011 588 572 (2 563) 586 009
Segmental analysis
Total Retail motor
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 7 362 224 6 507 518 6 881 230 6 094 517
Operating profit 199 992 108 103 161 735 99 103
Net finance costs (19 517) (17 734) (48 295) (50 062)
Profit before taxation 180 475 90 369 113 440 49 041
Total assets 2 176 761 2 005 167 1 114 609 990 018
Total liabilities 1 590 752 1 505 221 857 903 743 751
Goodwill at year-end 89 972 89 972 84 972 84 972
Employee costs 484 097 453 714 392 220 368 364
Number of employees 2 572 2 427 2 143 2 007
Car hire Marine and leisure
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 299 442 247 956 142 321 130 832
Operating profit 23 517 14 457 (230) (26 170)
Net finance costs (298) (773) (229) (224)
Profit before taxation 23 219 13 684 (459) (26 394)
Total assets 454 825 492 321 63 186 74 078
Total liabilities 514 348 504 143 14 684 23 698
Goodwill at year-end - - 5 000 5 000
Employee costs 52 576 47 529 12 263 12 043
Number of employees 305 305 49 44
Financial services Corporate services
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 12 009 9 943 27 222 24 270
Operating profit 5 873 4 592 9 097 16 121
Net finance costs 494 1 782 28 811 31 543
Profit before taxation 6 367 6 374 37 908 47 664
Total assets 12 662 19 910 531 479 428 840
Total liabilities 13 314 15 931 190 503 217 698
Goodwill at year-end - - - -
Employee costs - - 27 038 25 778
Number of employees - - 75 71
Commentary on results
The Group produced a solid all-round performance during the year ended 28
February 2011.
Increased revenue, higher trading margins and a tight reign on operating
expenses enabled the Group to record a 85% improvement in operating profit. A
lower effective tax rate, 28% compared with 39% in 2010, resulted in
attributable income rising 120%. At headline earnings per share level, after
eliminating the current and prior year goodwill charges, the increase amounted
to a pleasing 45%.
The statement of cash flow reflects continued sound cash management. Cash
generated from operations increased 42% to R249 million. This enabled the Group
to pay dividends of R37 million, capital and dividend payments to its
empowerment partner in the sum of R43 million, and still end the year with cash
resources of R313 million (2010: R253 million).
The financial position remains sound in terms of both liquidity and debt: equity
ratios. The Group has no long-term debt other than an interest-free advance from
its empowerment partner. The 14% increase in inventory and trade and other
receivables is in line with the higher trading level, and is partially offset by
the 10% increase in trade and other payables.
The recommended dividend of 30 cents per share, together with the December 2010
dividend of 13 cents per share, will be covered 2,5 times by headline earnings.
The directors are comfortable with this cover in view of the Group`s existing
cash reserves and the positive outlook for the year ahead.
Retail motor
In contrast to even the most optimistic forecasts, national new vehicle sales
growth over 2009 reached 25%. The growth was driven by three principal factors:
* Vehicles sold during the boom years, 2005 and 2006, are now 4-5 years old and
due for replacement;
* The gradual improvement in consumers` debt levels, coupled with eased
borrowing conditions; and
* The introduction of a number of competitively-priced entry level models.
Not surprisingly, the majority of the sales growth was in the entry level
segment. Biggest market share gains were enjoyed by Volkswagen and the Korean-
based manufacturers, brands to which the Group has little exposure. Collectively
the manufacturers which the Group represents increased sales by 18%, whilst
Group new vehicle sales increased 28,3%.
The segment recorded a pleasing 131% improvement in profit before taxation.
Marine and leisure
Operating as it does in the luxury market sector, it was always appreciated that
the marine and leisure segment of the Group would be the last to recover from
the depressed economic cycle. Whilst consumers` appetites have returned, credit
extension in this area remains tight. The recent summer months have shown signs
of improved demand and this trend is expected to continue.
Within the segment, gross profit margins have been improved by 25% and working
capital assets reduced by 16%. The segment recorded a substantial turnaround
with operating losses reduced to R0,2 million. It has budgeted to record
continued improvement in the year ahead.
Car hire
Buoyed by the record low interest rates and firm resale prices for its recycled
fleet, First Car Rental achieved outstanding results.
The World Cup produced a fill-up, enabling the division to obtain optimum fleet
utilisation levels during a traditionally off-peak period. The decision not to
substantially increase the fleet size for the event proved beneficial.
First Car Rental has completed its third year since rebranding and looks set to
continue its success.
Financial services
Prior year losses in the Group`s joint ventures with finance houses have been
largely offset, and a positive contribution was achieved during the last quarter
of the year under review.
Prospects
On balance, the Group is soundly structured and well positioned in terms of
personnel and financial resources. The directors are confident that it will
deliver pleasing results next year.
Dividend
A dividend (dividend number 46) of 30 cents per share will be paid on Monday, 13
June 2011 to members reflected in the share register of the Company at the close
of business on the record date, Friday, 10 June 2011. Last day to trade `cum`
dividend is Friday, 3 June 2011. First day to trade `ex` dividend is Monday, 6
June 2011. Share certificates may not be dematerialised or rematerialised from
Monday, 6 June 2011 to Friday, 10 June 2011, both days inclusive.
The total value payable is R32 442 000. Secondary taxation on companies of R3
244 200 will be charged on this dividend.
Basis of preparation
The results of the Group for the year ended 28 February 2011 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 has achieved substantial compliance with the principles recorded in
the King III report. A full report is tabled in the year-end Annual Report.
Annual general meeting
The annual general meeting will be held at 1 Wilton Crescent, Umhlanga Ridge at
12h00 on Wednesday, 25 May 2011.
The information has been audited by the Group`s external auditor,
PricewaterhouseCoopers Inc. A copy of their unqualified audit report is
available for inspection at the Company`s registered office.
By order of the board of directors.
K Fonseca (CA)SA
Company Secretary
19 April 2011
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,
JTM Edwards, SK Jackson, VP Khanyile, MH Shelembe, JW Alderslade (alternate)
www.cmh.co.za
Date: 19/04/2011 12:00:01 Produced by the JSE SENS Department.
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