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CMH
CMH
CMH - Combined Motor Holdings Limited - Interim report for the six months ended
31 August 2011
COMBINED MOTOR HOLDINGS LIMITED
CMH GROUP
("the Company" or "the Group")
Registration number: 1965/000270/06
Share code: CMH ISIN: ZAE000088050
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2011
GROUP FINANCIAL HIGHLIGHTS
6 months
Change 31 August
% 2011
Revenue (R`000) 9 3 928 536
Operating profit (R`000) (10) 73 335
Total profit and comprehensive income (R`000) (4) 42 730
Earnings per share (cents) (4) 37,0
Diluted earnings per share (cents) (4) 36,8
Headline earnings per share (cents) (4) 37,0
Diluted headline earnings per share (cents) (4) 36,8
Dividend payable - December 2011 (cents) - 13,0
Total assets (R`000) 6 2 114 520
Cash resources (R`000) 23 262 667
6 months 12 months
31 August 28 February
2010 2011
Revenue (R`000) 3 604 580 7 362 224
Operating profit (R`000) 81 337 199 992
Total profit and comprehensive income (R`000) 44 320 130 336
Earnings per share (cents) 38,6 111,2
Diluted earnings per share (cents) 38,5 109,2
Headline earnings per share (cents) 38,6 111,3
Diluted headline earnings per share (cents) 38,5 109,3
Dividend payable - December 2011 (cents) 13,0 34,0
Total assets (R`000) 2 003 414 2 176 761
Cash resources (R`000) 213 773 312 588
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
Change 2011 2010 2011
% R`000 R`000 R`000
Revenue 9 3 928 536 3 604 580 7 362 224
Cost of sales 10 (3 374 346) (3 063 074) (6 075 026)
Gross profit 2 554 190 541 506 1 287 198
Other operating income 1 500 1 500 3 000
Impairment of goodwill - - (167)
Selling and
administration expenses 4 (482 355) (461 669) (1 090 039)
Operating profit (10) 73 335 81 337 199 992
Finance income 9 5 253 4 820 12 831
Finance costs (25) (14 928) (20 007) (32 348)
Profit before taxation (4) 63 660 66 150 180 475
Taxation (4) (20 930) (21 830) (50 139)
Total profit and
comprehensive income (4) 42 730 44 320 130 336
Attributable to:
Equity holders of the
Company (4) 39 968 41 667 120 031
Non-controlling
shareholders of
subsidiaries 4 2 762 2 653 10 305
(4) 42 730 44 320 130 336
Reconciliation of
headline earnings
Total profit and
comprehensive income 42 730 44 320 130 336
Non-trading item
- impairment of goodwill - - 167
Headline earnings (4) 42 730 44 320 130 503
Attributable to:
Equity holders of the
Company 39 968 41 667 120 173
Non-controlling
shareholders of
subsidiaries 2 762 2 653 10 330
42 730 44 320 130 503
Earnings per share
(cents)
Basic 37,0 38,6 111,2
Diluted basic 36,8 38,5 109,2
Headline 37,0 38,6 111,3
Diluted headline 36,8 38,5 109,3
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Operating profit adjusted for non-cash
items 132 119 138 506 292 161
Sale of car hire fleet vehicles 127 007 149 383 306 238
Purchase of car hire fleet vehicles (89 034) (118 838) (336 536)
Working capital changes:
Movement in inventory (11 906) (11 319) (105 087)
Movement in trade and other receivables (52 272) (91 079) (21 593)
Movement in trade and other payables (47 507) 3 534 113 607
Cash generated from operations 58 407 70 187 248 790
Finance income received 5 253 4 820 12 831
Finance costs paid (14 928) (20 007) (32 348)
Dividends paid (45 547) (33 071) (36 703)
Taxation paid (20 154) (24 980) (49 784)
Cash flow from operating activities (16 969) (3 051) 142 786
Net cash movement from investing
activities (18 971) (22 320) (39 935)
Net cash movement from financing
activities (13 981) (13 935) (43 342)
Net movement in cash and cash
equivalents (49 921) (39 306) 59 509
Cash and cash equivalents at beginning
of period 312 588 253 079 253 079
Cash and cash equivalents at end of
period 262 667 213 773 312 588
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Assets
Non-current assets
Plant and equipment 55 918 64 887 58 565
Goodwill 89 972 89 972 89 972
Investments 197 171 176 037 187 271
Deferred taxation 56 419 51 408 55 287
399 480 382 304 391 095
Current assets
Car hire fleet vehicles 333 063 371 063 415 636
Inventory 837 107 731 433 825 201
Trade and other receivables 282 203 299 417 229 931
Tax paid in advance - 5 424 2 310
Cash and cash equivalents 262 667 213 773 312 588
1 715 040 1 621 110 1 785 666
Total assets 2 114 520 2 003 414 2 176 761
Equity and liabilities
Capital and reserves
Share capital and reserves 597 941 522 241 588 572
Non-controlling interest (12 900) (9 615) (2 563)
Total equity 585 041 512 626 586 009
Non-current liabilities
Advance from non-controlling
shareholders
of subsidiaries 126 309 158 414 144 073
Interest-bearing borrowings - 201 -
Assurance funds 11 558 13 670 13 137
Lease liabilities 112 576 103 479 110 176
250 443 275 764 267 386
Current liabilities
Advance from non-controlling
shareholders
of subsidiaries 36 066 36 108 32 089
Interest-bearing borrowings 588 1 766 986
Trade and other payables 1 238 515 1 177 150 1 286 022
Current tax liabilities 3 867 - 4 269
1 279 036 1 215 024 1 323 366
Total equity and liabilities 2 114 520 2 003 414 2 176 761
Net asset value per share (cents) 541 475 542
GROUP STATEMENT OF CHANGES IN EQUITY
Share Non-distributable Share-based
capital reserve payment reserve
R`000 R`000 R`000
At 28 February 2010 21 123 5 896 6 449
Issue of shares 1 689
Total profit and
comprehensive income
Share-based payment reserve 768
Dividends paid
Purchase of non-controlling
shareholders` interest in
subsidiaries
At 31 August 2010 22 812 5 896 7 217
Issue of shares 490
Total profit and
comprehensive income
Transfer to share capital 1 711 (1 711)
Dividends paid
Share-based payment reserve 1 533
Purchase of non-controlling
shareholders` interest in
subsidiaries
At 28 February 2011 25 013 5 896 7 039
Issue of shares 205
Total profit and
comprehensive income
Share-based payment reserve 1 644
Dividends paid
At 31 August 2011 25 218 5 896 8 683
Attributable
Retained to equity holders Non-controlling
earnings of the Company minority interest
R`000 R`000 R`000
At 28 February 2010 467 296 500 764 (818)
Issue of shares 1 689
Total profit and
comprehensive income 41 667 41 667 2 653
Share-based payment
reserve 768
Dividends paid (22 647) (22 647) (10 424)
Purchase of
non-controlling
shareholders` interest in
subsidiaries (1 026)
At 31 August 2010 486 316 522 241 (9 615)
Issue of shares 490
Total profit and
comprehensive income 78 364 78 364 7 652
Transfer to share capital
Dividends paid (14 056) (14 056) (132)
Share-based payment
reserve 1 533
Purchase of
non-controlling
shareholders` interest in
subsidiaries (468)
At 28 February 2011 550 624 588 572 (2 563)
Issue of shares 205
Total profit and
comprehensive income 39 968 39 968 2 762
Share-based payment
reserve 1 644
Dividends paid (32 448) (32 448) (13 099)
At 31 August 2011 558 144 597 941 (12 900)
Total
equity
R`000
At 28 February 2010 499 946
Issue of shares 1 689
Total profit and comprehensive income 44 320
Share-based payment reserve 768
Dividends paid (33 071)
Purchase of non-controlling shareholders` interest in subsidiaries (1 026)
At 31 August 2010 512 626
Issue of shares 490
Total profit and comprehensive income 86 016
Transfer to share capital
Dividends paid (14 188)
Share-based payment reserve 1 533
Purchase of non-controlling shareholders` interest in subsidiaries (468)
At 28 February 2011 586 009
Issue of shares 205
Total profit and comprehensive income 42 730
Share-based payment reserve 1 644
Dividends paid (45 547)
At 31 August 2011 585 041
SEGMENTAL ANALYSIS
Total Retail motor
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 3 928 536 3 604 580 3 695 225 3 386 602
Operating profit 73 335 81 337 63 998 72 463
Net finance costs (9 675) (15 187) (26 212) (26 411)
Profit before taxation 63 660 66 150 37 786 46 052
Total assets 2 114 520 2 003 414 1 230 157 1 112 029
Total liabilities 1 529 479 1 490 788 891 552 805 782
Goodwill 89 972 89 972 84 972 84 972
Number of employees 2 654 2 504 2 208 2 083
Car hire Marine and leisure
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 138 759 141 601 67 086 50 325
Operating profit 9 239 17 234 (1 864) (1 269)
Net finance costs - (7) (498) (1 001)
Profit before taxation 9 239 17 227 (2 362) (2 270)
Total assets 357 931 453 996 52 879 68 053
Total liabilities 438 997 440 341 8 370 14 300
Goodwill - - 5 000 5 000
Number of employees 306 302 59 46
Financial services Corporate services
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Revenue 5 761 6 058 21 705 19 994
Operating profit 2 860 3 555 (898) (10 646)
Net finance costs 412 319 16 623 11 913
Profit before taxation 3 272 3 874 15 725 1 267
Total assets 16 523 13 693 457 030 355 643
Total liabilities 14 879 14 011 175 681 216 354
Goodwill - - - -
Number of employees 3 3 78 70
COMMENTARY ON RESULTS
National new vehicle sales statistics belie the difficult trading conditions
which prevailed during the period under review.
The 16% increase in national passenger vehicle sales during the six months ended
31 August 2011 arose largely from the lower-priced, entry-level segment. These
models have experienced price deflation, and retail margins have been eroded.
Supply shortages following the tsunami in Japan were worse than initially
anticipated, and hampered the Group`s Toyota, Nissan and Honda operations. The
relatively low number of working days in April and May exacerbated the problem.
From a 9% increase in revenue, gross profit increased by 2%. Selling and
administration expenses were contained at a 4% increase, and control over cash
resources reduced net finance charges by 36%. The net result is that
attributable headline earnings fell 4% to 36,8 cents per share. The dividend has
been maintained at 13 cents.
RETAIL MOTOR
The Group`s 14% increase in new car volume sales was offset by a 4% decrease in
used vehicle sales. Discounts, special offers and attractive warranty packages
have shifted consumer demand from the medium-priced used car market, to the
lower end of the new car range. The new-to-used sales ratio within the Group has
increased from 1,3 to 1, to 1,5 to 1. Used car sales are traditionally more
profitable than new sales at retail level, and the shift has impacted adversely
on gross profit levels. Parts and service departments continued to provide a
steady and dependable base.
CAR HIRE
The 2011 Annual Report recorded that this division was able to produce
outstanding results largely because the firm used car market during the 2010
World Cup enabled it to recycle its fleet at favourable prices. Ignoring that
one-off injection, the car hire division has produced commendable results for
the period. Daily rental rate revenue has been maintained, and fleet utilisation
improved. Further growth is expected during the second half, which is
traditionally a stronger trading period.
MARINE AND LEISURE
Although conditions in this sector remain tough, there are signs of a mild
recovery. Prior year cost-cutting and working capital reductions have enabled
the business to survive the depressed trading period, and it is hoped that the
approaching summer months will herald a return to positive trading results.
OTHER SERVICES
Trading deficits recorded in the Group`s joint ventures with finance banks in
prior years have all but been wiped out and a modest positive contribution was
earned during the period. Cost-cutting and cash flow management have enabled a
pleasing improvement in the corporate services division.
PROSPECTS
After a buoyant start to calendar 2011, national new vehicle sales have slowed
to the extent that many are predicting reduced growth for the balance of the
year. Rising fuel and electricity prices continue to erode disposable incomes,
and the proposed tolling system in the Gauteng province will add considerably to
motoring costs. On the positive side, the threat of an interest rate hike
towards the end of the year appears to have receded, and this will bring relief
to potential buyers seeking finance facilities. This month the Group will launch
the importation and retail distribution of the MG range of vehicles. The models
have proved popular in the United Kingdom and will be marketed initially from
seven Group and five independent dealerships.
CHANGE OF DIRECTOR
MH Shelembe resigned as a director with effect from 14 September 2011, and was
replaced by D Molefe.
DIVIDEND
A dividend (dividend number 47) of 13 cents per share will be paid on Monday 19
December 2011 to members reflected in the share register of the Company at the
close of business on the record date, Thursday 15 December 2011. Last day to
trade `cum` dividend is Thursday 8 December 2011. First day to trade `ex`
dividend is Friday 9 December 2011. Share certificates may not be dematerialised
or rematerialised from Friday 9 December 2011 to Thursday 15 December 2011, both
days inclusive. The total value payable is R14 063 214. Secondary taxation on
companies of R1 406 321 will be charged on this dividend.
BASIS OF PREPARATION
The results of the Group for the six months ended 31 August 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 the Companies
Act, 2008 of South Africa.
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 2011.
These results have been prepared under the supervision of the financial
director, Stuart Jackson.
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.
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
12 October 2011
COMBINED MOTOR HOLDINGS LIMITED
("the Company" or "the Group")
Registration number: 1965/000270/06
Share code: CMH ISIN: ZAE000088050
REGISTERED OFFICE
1 Wilton Crescent, Umhlanga Ridge, 4319
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown, 2107
SPONSOR
PricewaterhouseCoopers Corporate Finance (Pty) 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, D Molefe (appointed 14 September 2011),
JW Alderslade (alternate)
www.cmh.co.za
Date: 12/10/2011 12:00:01 Produced by the JSE SENS Department.
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