| Wed 28 Feb 2001, 0:00 | | Imperial - Unaudited Results For The Half Year |
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Imperial Holdings Limited
(Registration number 1946/021048/06)
INTERIM RESULTS
Income statement
Half year ended 25 December
Audited
year ended
Unaudited 25 June
2000 1999 % 2000
Rm Rm change Rm
Revenue 10 761 7 187 50 14 944
Profit from operations
before depreciation 1 257 862 1 914
Depreciation 372 278 612
Profit from operations 885 584 52 1 302
Net financing costs (205) (117) (177)
Income from associates 10 9 21
Profit before exceptional items 690 476 45 1 146
Exceptional items - 1 (6)
Income before taxation 690 477 45 1 140
Taxation 165 109 238
Income after taxation 525 368 43 902
Outside shareholders` interest 34 13 39
Net profit for period 491 355 38 863
Headline earnings per share * (cents) 236 184 28 437
Net asset value per share (cents) 2 985 2 348 2 797
Number of shares (million)
- in issue 212 193 209
- weighted average 211 192 199
Earnings per share reconciliation* Cents Cents Cents
Headline earnings per share before
restatements outlined below 241 193 25 444
Change in accounting policies
to comply with new accounting
standards (note 2) (5) (9) (7)
Headline earnings per share 236 184 28 437
Goodwill amortisation (note 1) (4) - -
Exceptional non-recurring items - 1 (3)
Earnings per share 232 185 25 434
*Based on the weighted average number of shares in issue
Note 1.
The goodwill impact is excluded from the headline earnings per share
computation.
Note 2. Change in accounting policy
During the year the Group adopted the following new accounting policies.
The Group adopted AC102 (Income Taxes) which had the effect of increasing the
taxation charge in the income statement by R6 million for December 1999 and by
R14 million for June 2000. The deferred tax asset was increased by R11 million
at December 1999 and by R3 million at June 2000.
The Group adopted AC131 (Business combinations) and AC129 (Intangible assets).
This had the effect of capitalising goodwill, being the surplus of the purchase
price above the net asset value (fairly valued) as an intangible asset in the
period under review amounting to R223 million. This goodwill is being amortised
over its estimated useful life (6-15 years) and resulted in a charge to the
income statement of R8 million. This has not been applied retrospectively.
The Group also adopted certain other accounting standards which became
mandatory, but did not affect the Group during the period under review except
for certain balance sheet reclassifications.
Except as stated above, the principal accounting policies adopted in the
preparation of this interim report are consistent in all material respects with
those applied in the previous annual report.
In the prior year the group adopted AC111 (Revenue). The impact of this on the
prior years figures has been fully documented in the June 2000 annual report.
The December 1999 figures have been restated accordingly.
Additional information Rm Rm Rm
Income before taxation
This is stated after
investment income - dividends 4 3 8
Profit on sale of banking investment - - 56
Interest income / (cost)
- Financial services businesses 153 130 221
- Other operations (205) (117) (177)
Balance sheet
At 25 December
Audited
Unaudited 25 June
2000 1999 2000
Rm Rm Rm
Property, plant and equipment 1 345 943 1 173
Aviation leasing fleet 1 570 592 1 181
Transport and allied assets 1 565 1 254 1 295
Intangible assets 252 19 23
Investments 909 737 849
Banking and other advances 3 649 2 632 3 087
Deferred taxation 68 47 87
Motor vehicles for hire 1 569 976 1 155
Inventories 2 421 1 315 1 554
Trade and other receivables 3 295 2 179 2 824
Cash and cash equivalents 820 934 1 099
Total assets 17 463 11 628 14 327
Insurance funds 229 236 209
Banking liabilities 2 102 1 036 1 605
Interest bearing borrowings 4 026 2 793 3 068
Deferred taxation 159 97 166
Other liabilities 4 509 2 887 3 354
Total liabilities 11 025 7 049 8 402
Net assets 6 438 4 579 5 925
FUNDED BY:
Shareholders` equity 6 341 4 531 5 854
Outside shareholders` interest 97 48 71
Total shareholders` equity 6 438 4 579 5 925
Supplementary information
Investments
- Listed at market value 539 445 502
- Associates at carrying value 65 115 97
- Unlisted at directors` valuation 162 144 186
- Loans receivable 148 40 63
Capital expenditure 1 375 540 1 702
Capital commitments 218 60 99
Statement of changes in equity
Half-year ended 25 December 2000
Share capital Non-distribu Distribu- Total
table table
and premium reserve reserve
Rm Rm Rm Rm
Balance at 25 June 2000 as
restated (see note 2 ) 3 585 117 2 152 5 854
Translation of foreign
operations not recognised
in the income statement - (8) - (8)
Net profit for period - - 491 491
Share of retained earnings
of associates - 10 (10) -
Realised losses on
sale of investments - (2) 2 -
Contingency reserve - 1 (1) -
Issue of ordinary shares 4 - - 4
Balance at 25 December 2000 3 589 118 2 634 6 341
Abridged cash flow statement
Half-year ended 25 December
Audited
Year ended
Unaudited 25 June
2000 1999 2000
Rm Rm Rm
Generated by operating activities 480 394 1 120
Utilised in investing activities (1 576) (681) (2 437)
Invested in banking activities (64) (1 000) (886)
Net cash flow from financing activities 382 4 1 228
Net movement in cash and cash equivalents (778) (1 283) (975)
Cash and cash equivalents
(short-term finance) at beginning
of period (248) 727 727
Cash and cash equivalents
(short-term finance) at end of period (1 026) (556) (248)
Divisional analysis
Half-year ended 25 December
Audited
year ended
Unaudited 25 June
2000 1999 % 2000
Rm Rm change Rm
RevenueBanking 304 261 16 516
Life assurance 111 81 37 183
Short-term insurance 340 271 25 505
Leasing and fleet management 479 366 31 882
Aviation leasing 792 621 28 1 036
Logistics and transport 3 914 1 785 119 4 395
Car rental and tourism 633 585 8 1 100
Distributorships 1 878 751 150 1 639
Motor vehicle dealerships 4 023 3 185 26 6 267
Group 41 25 64 98
12 515 7 931 16 621
Inter-Group eliminations (1 754) (744) (1 677)
10 761 7 187 50 14 944
Profit from operations
Banking 98 32 206 161
Life assurance 21 28 (25) 34
Short-term insurance 23 36 (36) 54
Leasing and fleet management 170 73 133 258
Aviation leasing 93 64 45 100
Logistics and transport 171 128 34 206
Car rental and tourism 82 72 14 163
Distributorships 116 72 61 140
Motor vehicle dealerships 102 58 76 174
Group and inter-Group eliminations 9 21 (57) 12
885 584 52 1 302
* Revenue up 50% to R10 761 million
* Earnings attributable to shareholders up 38% to R491 million
* Headline earnings per share up 28%
COMMENTARY ON HALF-YEAR RESULTS OF DECEMBER 2000
Imperial achieved substantial growth in its revenues and profits for the six
months to 25 December 2000 over the corresponding previous reporting period.
Revenues increased by 50%, and an improved margin caused operating profit to
increase by 52%. Following on higher interest costs and an increased effective
tax rate, attributable profit grew by 38%. Headline earnings per share
increased by 28% after servicing a 10% increase in the number of shares in
issue.
The improvement in the banking division from its weak performance in the
six-month period to December last year contributed significantly to the EPS
growth.
The operating margin, at 8,2%, is highly satisfactory when compared to 8,1%
previously and when viewed against an increasingly competitive trading
environment. The Group nevertheless continued its growth pattern with market
share gains, expansion at home and abroad and building its customer base
through improved service offerings.
Our revenue growth of 50% was attributable to organic growth of 19% led by
distribution and motor retailing and 31% acquired growth.
Total gross assets grew by 22% or R3,1bn since the June year-end to R17,5bn.
Substantial movement occurred in aviation leasing, vehicles for hire, transport
and allied assets, as well as in current assets which was necessitated by the
growth in our revenues. Imperial Bank grew its advances book by R562m to R3
649m since June 2000.
Interest bearing borrowings have increased by R958m since the June year-end but
will be reduced through the Imperial Bank transaction with Nedcor referred to
below, which also entails the redemption by Imperial Bank of R624m advanced to
it by the Group.
An important development has been the banking partnership formed with Nedcor
Limited, who have agreed to acquire 50,1% of Imperial Bank for net asset value
and a goodwill amount of R270m. The transaction is still subject to final
ministerial approval. The most important consideration to us was the great
potential that arises for the growth of the bank.
Through this partnership, Imperial Bank will benefit from more competitive
funding costs and will enjoy synergistic benefits through a sophisticated
Nedcor infrastructure. In this way, we expect the enhancement to the bank`s
profit to compensate for our lower shareholding in the bank.
Our expansions abroad are very encouraging
* We are well satisfied with Imperial Logistics International. Substantial new
contracts with blue chip clients in the automotive and steel industries have
been won. Haniel Reederei, operating bulk transport along Europe`s inland
waterways, is performing well and forms an integrated link in certain of our
logistics operations.
* The vehicle rental business in Australia, Pacific Car and Truck Hire, is
prospering under our ownership and is growing its market share and branch
network.
* Seven Europcar outlets were acquired in the United Kingdom recently with
positive prospects.
* Imperial Forklift in the UK has grown its market share substantially since we
acquired it and is actively switching its business to leasing in line with
Imperial`s philosophy for the business.
* Our Aviation Leasing Division`s operation in Ireland has done very well for
the period and has contracted for a significant expansion of its freighter
aircraft fleet.
On a divisional basis, the results can be summarised as follows:
The financial services businesses delivered improved results. Banking advances
were up 18% since June 2000 and 39% up since December 1999. Bad debts were well
under control and profits increased to R98m against a poor R32m in the
corresponding period last year. The insurance operations increased their
revenues to R451m against R352m in the previous year though profits were down
to R44m from R64m previously. Underwriting was on target but the investment
income was down due to realisation surpluses.
The businesses of leasing of vehicles and aviation equipment grew dramatically
with operating profits of R263m compared to R137m in the corresponding period.
Our existing leasing contracts are performing well with substantial savings
being achieved for our clients. While no new major Government contracts have
been obtained, substantial new corporate business has been landed. The
expansion of our aviation leasing fleet is continuing with substantial new
leasing contracts having been concluded at the end of our last financial year
and into the new year.
Logistics and Transport have expanded locally and internationally with revenues
growing to R4bn or 119% on the corresponding period. The acquisition of Haniel
Reederei in Germany represented 55% of the increase. Benefits from previous
acquisitions and escalations as a result of inflation, also contributed. Some
areas of road transport in South Africa are marginal at best, especially flat
deck and refrigerated transport. We are taking decisive steps to improve our
position in these areas. The operating profit of the division, disappointingly,
was only up 34%, as margins declined as a result of different business mix,
fuel price increases and resultant price resistance in the marketplace.
The car rental and tourism business had a tough period with weak demand,
reduced tourism and price competition. However, we performed satisfactorily in
the overall situation and achieved a 14% increase in operating profits aided by
tight cost control.
Our distributorship division enjoyed an excellent six months. The passenger
vehicle operations were outstanding with strong growth in market share in
existing brands, and a maiden contribution by the newly added Hyundai
distributorship. Truck distribution was unchanged, but the forklift business,
which primarily imports from Japan, experienced tougher conditions, due to the
strong Yen. However, due to the strong passenger car performance, revenue grew
by 150% and operating profit by 61%.
The motor vehicle dealerships increased their revenues by 26% to R4,0bn due to
good market conditions and the addition of new dealerships, including Hyundai
and other imported brands. Operating profits were R102m compared with R58m on
margins of 2,5%, compared to 1,8% a year earlier.
Prospects
The South African economy is still experiencing only a mild and isolated
economic upswing. As a result, businesses are not yet experiencing
broadly-based volume and margin improvements. However, the Group is well
positioned in its various markets where it holds many leadership positions, and
is well focused and ready to benefit from an improving economy. Furthermore,
the continuing good performance of our international businesses will enhance
our performance, and some small expansions were recently made in motor
dealerships, freight clearing and forwarding.
We expect a demanding second half to our year with fairly competitive
conditions in most of our divisions, and whilst growth will be less than that
reported for this first half, we are confident that we will end the year with
satisfactory growth in earnings per share.
Capitalisation issue in lieu of dividend
Notice is hereby given that a capitalisation issue of shares has been awarded
in the ratio of 1,4 new ordinary shares per 100 shares held to members
registered in the books of the company at the close of business on 23 March
2001.
The ordinary shares to be issued pursuant to the capitalisation issue totalling
2 973 741 new ordinary shares will be issued as fully paid up at a par value of
4 cents per share by way of capitalisation of R 191 181 795 of the company`s
share premium account. Fractions of a share will be paid in cash calculated at
6 429 cents per share.
Application is being made to the JSE Securities Exchange South Africa for a
listing of the new ordinary shares to be issued pursuant to the capitalisation
issue with effect from the commencement of business on 26 March 2001.
Share certificates in respect of the capitalisation issue will be posted by
registered mail and cheques in respect of the fractional entitlements by
ordinary mail on or about Monday, 26 March 2001. Cheques for fractional
entitlements that constitute blocked assets will be credited to the blocked
accounts and be controlled by the authorized dealers.
In respect of non-resident shareholders whose existing share certificates are
restrictively endorsed in terms of South African Exchange Control Regulations,
the new share certificates to be issued in terms of the capitalisation issue
will be similarly restrictively endorsed.
New share certificates and residual cash payments in respect of the
capitalisation issue based on emigrants shares blocked in terms of the exchange
control rulings will be forwarded to the South African authorised dealer
controlling their blocked assets for control in terms of the exchange control
regulations. Such share certificates will be endorsed ("non-resident").
By order of the board
W G Lynch
Chairman
27 February 2001
Directors
Executive Non-executive Secretary
W G Lynch (Irish) Chairman P Abelkop Z N Moolla
M H O Els P L Erasmus
R L Hiemstra J R McAlpine
M C A Jackson E Molobi
M J Koch F van Zyl Slabbert
A H Mahomed A Tugendhaft
A J C Rieckhoff
G W Riemann (German)
C E Scott
Business address
and registered office Share transfer secretaries Sponsor
140 Boeing Road East tile Registrars Ltd Merrill Lynch S A
Elma Park 11 Diagonal Street 138 West Street
Edenvale 1609 Johannesburg 2001 Sandown Sandton 2196
Company registration number: 1946/021048/06
This announcement, together with a financial presentation, is available on the
Imperial Holdings website at: http:// www.imperial.co.za
