| Tue 27 Aug 2002, 0:00 | | Imperial Holdings Limited - Results For The Year E |
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IMPERIAL HOLDINGS LIMITED - RESULTS FOR THE YEAR ENDED 25 JUNE 2002
Imperial Holdings Limited
(Registration number 1946/021048/06)
Share code: IPL ISIN code: ZAE 000003620
Maximum synergy
Imperial Holdings Limited
results for the year ended 25 June 2002
Revenue up 29%
- cash generated by operations up 25%
- headline earnings per share up 15%
The Group in action
Logistics and transport
Imperial manages over 1 million square metres of warehouse space across the
world
Leasing and fleet management
Forklift business growing rapidly
Aviation leasing
Operates out of 19 countries and added outstanding new business
Car rental and tourism
64% acquired in tourvest
Distributorships
Invested R140 million into dealer network infrastructure for future growth.
Motor vehicle dealerships
Expanded to 151 dealerships
Insurance
Strong underwriting results
Major Achievements
Group doubled in size in three years
Total assets grow to R20 billion
Acquired an effective 64% interest in Tourvest
Joint venture aviation lease finance company set up with Sanlam/Gensec
Successful issue of two corporate bonds raising R1,6 billion
OVERVIEW
In the light of the events of the past 12 months, the group`s results can be
described as outstanding. Three months into our new financial year, the world
was shattered by the attacks in the United States. The global economy had to
contend with a sudden and sharp loss of confidence and in South Africa in
December 2001 we had to face an additional challenge in the precipitous decline
in the value of the rand. This had a serious impact on the group`s vehicle
distribution businesses and introduced great uncertainty into our domestic
economy. In South Africa some sectors ultimately benefited from the weakness in
the currency and South Africa became a preferred travel destination being
perceived as relatively safe and offering value for money. The group`s car
rental and tourism businesses benefited from this.
To report a 29% increase in revenues and a 15% growth in headline earnings
against this background of volatile trading conditions is pleasing. It is also
gratifying to observe that Imperial has maintained its unbroken record of
increasing earnings every year and, over the past decade, the average compound
annual growth in revenue has been 43% while the improvement in headline earnings
per share was 30% per annum. The pre-tax profit track record is equally
impressive and Imperial has achieved an annual growth rate of 39% over the past
10 years. Looked at another way, the Imperial group has effectively doubled in
size every three years. In 1999 revenues were under R10billion compared with
today`s R28 billion and earnings have grown from R661million three years ago to
just under R1,3 billion.
These consistently excellent results re-inforce the logic of Imperial`s founding
principle of operating an integrated transportation and mobility group. Our
management philosophy is to blend strong entrepreneurial and marketing flair
with a diligent customer focus and to overlay all areas of our business with
strict financial discipline.
RESULTS
Imperial`s revenue for the year to 25 June 2002 grew to R28,1 billion compared
with the R21,9 billion achieved in the previous year. Profit before taxation
rose 19% from R1,6 billion to R1,9 billion as the group bettered the pace set at
the half year.
The group`s return on equity continued to improve and reached 17,7%, a fine
improvement on the 14,3% registered four years ago, in 1998. The ratio of
shareholders` equity to total assets remained at over 40%, again demonstrating
the group`s substantial financial strength.
The group`s operating margin accelerated in the second half and ended the year
at 8,1%. This reflects a decline from the 2001 margin of 8,3% as the higher
margin business from Imperial Bank is now accounted for as an associate
following Nedcor Limited`s acquisition of a 50,1% shareholding in the bank. The
group`s tax rate has increased from 21% to 27% due to lower levels of exempt
income and a higher tax rate in the group`s foreign and insurance businesses as
well as capital gains tax.
Depreciation after recoupments rose to R1 billion while financing costs
increased 17% to R500 million as a result of the higher interest rates
prevailing in the country and the group`s higher debt levels. The group reported
a R11 million increase in foreign exchange gains and headline earnings
attributable to shareholders were 15% ahead of the previous year at R1,3
billion.
Foreign exchange gains totalled R59 million for the year compared with R48
million a year ago. The year-end figure reflected the recovery in the value of
the rand from the end of December 2001 position when Imperial reported gains of
R91 million. The decline in foreign exchange gains had a short-term negative
impact on the profits in the second six months, but a firmer rand is not only
good for South Africa, it is also ultimately better for Imperial.
The foreign exchange gains for the year arise from the group`s offshore
activities and totalled R411 million of which R352 million relates to the
translation of balance sheets of foreign entities and our investment in those
businesses. This amount has been credited directly to non-distributable
reserves. The balance of R59 million reported in the income statement relates to
bank balances throughout the group and has been separately recognised within
operating income. This treatment complies with Statements of Generally Accepted
Accounting Practice in South Africa.
Headline earnings per share totalled 609 cents for the year compared with 528
cents for the 2001 financial year, a 15% improvement. The board has decided to
make a repayment of capital from share premium equivalent to 120 cents a share,
which increases the distribution for the year to 230 cents a share. In 2001
shareholders received a payout equivalent to 190 cents a share.
Imperial remains a powerful generator of cash and cash flow generated by
operations exceeded R2,8 billion during the period. The group`s total assets
increased by 22% to R19,9 billion of which leasing assets represent R4,5
billion, an increase of R1,1 billion over the year. Of this increase, aviation
leasing assets grew by over R700 million and vehicle and forklift leasing assets
accounted for R400 million.
Against the background of the group`s asset-intensive businesses and the
financing arrangements we have in place for our assets, we regard the group`s
gearing at 72,9% as healthy. All the group`s assets and liabilities are
reflected on the balance sheet. Looked at from another angle our leasing assets
of R4,5 billion exceed the net debt of R4,4 billion.
The priority attached to strict asset management can be seen from the fact that
inventories and receivables increased by only 16% during the period under
review. Net capital expenditure rose 9% to R2,8 billion of which R2 billion
represents an investment in expanding the business and R707 million replacement
expenditure. All expansion and acquisitions made during the year were financed
on a cash basis.
Highlights of the year include:
- The acquisition of an effective 64% of Tourism Investment Corporation
significantly increasing the group`s presence in the tourism industry
- Tempest Car Rental concluding a licensee arrangement for Southern Africa with
Sixt Car Rental, Germany`s largest car rental company
- The expansion of the motor dealership network by 21 dealerships, including the
R22 million acquisition of Murnau Motor Holdings with two BMW dealerships and
two Delta dealerships
- The acquisition of the Citroen distributorship in South Africa with Ukhamba
- The growth in the aviation leasing business and the award of lease contracts
by Jet Airways of India, BA-Comair and DHL International
- The formation of a joint venture with the Sanlam/Gensec Bank group to provide
funding for Safair Lease Finance (Pty) Ltd, an aviation lease company, which
sealed contracts with KLM Royal Dutch Airlines and South African Airways for the
new year
- The merger of Regent Life Namibia with Capricorn Life Namibia, giving the
combined business greater insurance buying power
- The successful award of the Northern Cape government vehicle leasing contract
- The acquisition of 100% of Imperilog which will enhance synergies within the
logistics and transport division
- The issue of two tranches of the Imperial Domestic Medium Term Note programme
raising R1,6 billion and diversifying the group`s financing arrangements
- Share buybacks totalling R497 million
- The introduction of enhanced corporate governance and risk management
practices
We were less successful in countering the effects of the collapse of the rand on
the price of imported vehicles and profits in the distributorship businesses
were squeezed. The car rental division closed its Australian vehicle rental
business, Pacific Car and Truck Rentals Holdings, shortly after September 11 and
in the United Kingdom, where we had failed to achieve critical mass, the
decision was taken to sell the Europcar rental franchise business back to
Europcar. With the German economy showing no growth over the period and our
primary markets - the auto and steel sectors - being hard hit, the contribution
from our offshore businesses to operating profit was below expectations.
LOGISTICS AND TRANSPORT
The logistics and transport division, the largest in the group, continued the
good performance reported at the halfway stage and reported a satisfactory year,
with revenue increasing 19% to R10,4 billion off the already large base of R8,7
billion. Our international logistics business grew revenue by 29%, assisted by
the stronger euro, while Southern African revenues rose by 11%. Operating
profit rose 30% to R443 million of which R318 million was generated by the
domestic and African businesses. Operating profit from the international
businesses increased by 10% to R125 million, however the operating margin fell
from 2,4% in 2001 to the current 2,0% reflecting the more rigorous conditions in
the global logistics market.
The margins achieved in Southern Africa are 7,4%, up from last year`s 5,7%.
The higher margin in the domestic business is also a consequence of the quality
of the business on the South African books and management`s strict focus on
costs. The benefits of the past years` restructuring and rationalisation are
also starting to bear fruit. The division`s operating assets increased by 35% to
R6 billion.
During the year Imperial invested R153 million and acquired the remaining shares
in Imperilog Limited that it did not already own at 180cents a share. The
business fits well with Imperial`s and synergistic benefits are expected to
accrue from Imperilog working more closely with the group`s other logistics and
transport operations.
Imperial Logistics International, which operates out of Duisburg, Germany, has a
number of brands including Panopa Logistics, JH Bachmann, Neska and Haniel
Reederei. It had a difficult period as the German automotive and steel
industries have been affected by the economic downturn in Europe and the events
of September 11 slowed the growth in world trade. Trade, however, did recover
towards December but new high security standards especially in the United States
have complicated systems and increased costs. The weaker German economy affected
the Haniel Reederei transhipment and warehousing business early in the financial
year but Neska maintained profitability as a result of tight cost controls and
acquisitions. JH Bachmann suffered currency losses and write-offs in Brazil as a
result of the currency collapse and in South Africa the merger with Megafreight
did not proceed as smoothly as had been expected and a loss was recorded. The
events of September 11 aggravated the situation but the integration of the two
businesses was protracted and business lost. JH Bachmann`s other businesses
around the world, especially in Germany, China and Indonesia, reported good
progress.
In South Africa the division has prepared itself well with the resources and
skills it needs to continue its strong growth. Although the current economic
climate is uncertain, future contracted income exceeds R9 billion which places
the division in a healthy position going forward. The international business has
R6 billion in future contracted income and with its operations ranged across the
globe and the remedial measure taken to improve margins, we should have a better
year.
LEASING AND FLEET MANAGEMENT
The division`s revenue rose by 23% to R1,6 billion and operating profit by 13%
to R402 million. Deprecation charges increased by 39%, reflecting the growth in
the value of the fleet, and is equivalent to 23% of the division`s revenue. The
operating margin slipped from 28% to 25% reflecting the higher growth in the
forklift leasing business that has a lower margin. Forklift leasing contracts,
however, being of a longer duration than fleet lease contracts, provide a longer
life, annuity-type income underpin to the business.
As it has become primarily a leasing operation, 100% of the Saficon Industrial
Equipment business has been included in the division`s results from the start of
the financial year whereas previously it was split between the leasing and
distributorship divisions. The comparative figures have been restated.
The division owns and manages, on a full maintenance lease or operating lease
basis, 14284 vehicles, up from last year`s 13416 vehicles. In addition the
division now manages 10921 vehicles as compared with 8180 a year ago. The
investment in the fleet grew to R1,9 billion at the year end, an increase of 32%
during the 12-month period and reflecting the demand for this outsourcing
option.
The forklift business continues to make good progress in South Africa and in the
United Kingdom which is reflected in the fact that Imperial`s lease fleet has
expanded 12% from 7169 to 8015 units. Imperial is Toyota`s largest forklift
dealer in the United Kingdom and a new operation has been opened in Doncaster.
Revenue in the South African operation was affected by a 25% increase in product
prices following the devaluation in the value of the rand, but there was
positive growth in fleet sizes and market prices for second-hand products are
firming as a result of the higher price of new forklifts.
The outlook for the division is excellent and future contracted income exceeded
R2,0 billion at the year end.
AVIATION LEASING
Aviation leasing had an excellent year as a result of substantial new business
gains. Revenue rose 39% to over R2 billion and operating profit advanced from
R198 million to R333 million, an increase of 68%. With the new business won,
operating assets climbed to R3,7 billion and capital expenditure to R939 million
with a consequent increase in borrowings and net financing costs. Depreciation
during the period was R174 million (2001 : R127 million). Interest bearing
borrowings totalled R2,1 billion at the year-end and net financing costs rose
from R99 million to R159 million, an increase of 61%. Reflecting the excellent
performance of the division, profit before tax (including income earned from
associate, Air Contractors) amounted to R192 million, 68% ahead of the R114
million achieved a year ago.
The division consists of Safair (Pty) Limited, 62% of National Airways and
Finance Corporation (NAC), South Africa`s largest general aviation company with
a fleet of 101 aircraft under management, and 49% of Air Contractors Limited
which is based in Dublin, Ireland. It operates out of 19 countries and more than
half the division`s earnings are hard currency based and 90% of the division`s
assets are movable and valued in dollars.
Safair specialises in value added aircraft leasing and expanded its lease
portfolio during the year with the delivery of 12 additional aircraft to lease
customers. We delivered seven Airbus A300 freighters to DHL International, three
new ATR 72-500 passenger aircraft to Jet Airways of India and two Boeing 737-400
passenger aircraft to British Airways-Comair.
The major event of the year was the successful establishment of the 50:50 joint
venture, Safair Lease Finance (Pty) Limited. To facilitate the continued growth
of the aviation leasing business and to alleviate much of the pressure on the
Imperial balance sheet it was decided to form a dedicated lease finance company
to specialise in the leasing of large commercial aircraft. The new company, a
partnership between Imperial and Sanlam Limited through its wholly-owned
subsidiary, Genbel Securities Limited, will be managed by Safair which will
provide all the required value added services including marketing and aircraft
management and maintenance services. Since the year-end Safair Lease Finance
has signed leases for aircraft worth more than R3billion, giving the new
business a firm foundation for the future. These long-term leases are for five
Airbus A300 freighters for DHL International which leases were transferred from
Safair, three Boeing 737-400 aircraft to KLM Royal Dutch Airlines and five new
Boeing 737-800s to South African Airways.
We remain confident about the prospects for this division, which has future
contracted income in excess of R7 billion (including the joint ventures
contracted income), as the businesses are well positioned for growth in their
respective markets. In addition to having outstanding and world-class personnel,
it has superior facilities and a wide and loyal customer network and base.
CAR RENTAL AND TOURISM
The division had an outstanding year, boosted by the acquisition of an effective
64% interest in Tourism Investment Corporation Limited (Tourvest). With
Tourvest contributing over half of it, revenue increased 126% to R2,8 billion
while operating profit rose by a larger margin, 141%, from R164 million to R371
million. The strong cash-generating abilities of Tourvest helped reduce the
division`s financing costs from a negative R18 million to a positive R1 million
and the division ended the year cash positive, compared with the previous year`s
interest-bearing borrowings amounting to R146 million. Profit before tax at R375
million was 155% ahead of the previous year`s R147 million. The division`s
operating assets grew from R816 million to R1,5 billion.
The car rental businesses benefited from rate increases which were maintained
for the year and had a marked impact on car rental margins. Following its
successful licensing agreement with Sixt, Germany`s largest car rental company,
and the influx of tourists into South Africa, Tempest-Sixt had an excellent
year. The used car disposal business Auto Pedigree performed well in a buoyant
used car market.
Our interest in Tourvest, acquired at 82,5 cents a share, has proved to be an
excellent acquisition, although in September one could have been forgiven for
thinking it ill-conceived. The South Africa tourism industry recovered
dramatically from December and Tourvest is a major beneficiary of the improved
sentiment towards South Africa. Revenue rose 29% to R1,3 billion and operating
income increased by a similar percentage from R129,3 million to R169,3 million.
The Tourvest group has strong cash-generating ability and had R204,7 million
cash flow from operating activities for the year. At the attributable level
income was R120,9 million against R84,3 million recorded in the previous
financial year, an increase of 43,6%. Headline earnings per share rose from 11,8
cents to 15,8 cents and the board has decided to pay an 8 cents a share
dividend.
The outlook for the car rental and tourism division is bright. The marketing
efforts of SA Tourism and events such as the World Summit on Sustainable
Development and the World Cup Cricket in 2003 create wonderful opportunities to
showcase our fine country. Our companies, diversified as they are across the
spectrum of the tourism and the car rental industries, are well positioned to
participate in the tourism boom that South Africa is currently enjoying, and
hopefully will enjoy for many years to come.
DISTRIBUTORSHIPS
Sales volumes remained almost unchanged during the year but the significant
price increases flowing from the sharp devaluation in the value of the rand
helped boost revenue by 18% to R3,6 billion. However, the division found trading
difficult in terms of margins. As there was a lag before we were able to pass on
the higher prices to customers, whereas local manufacturers were able to cushion
the price hikes over a period of time, competition intensified and the operating
margin in the division declined from 8,1% to 6,8%.
In response to the rand weakness which made its imported products uncompetitive,
Tyco rationalised its overhead structure. This restructuring has been successful
and Tyco reported a much improved and satisfactory operating profit. In the new
year, the popular DAF range of trucks from the Paccar organisation will
complement and extend the range of vehicles on offer from Imperial.
On the motor side, Renault lost approximately 1% market share at the worst of
the rand devaluation, but gathered steam in the second half. Hyundai and Kia
both lifted their market shares largely as a result of increased light
commercial vehicle sales and the introduction of new passenger models which
found ready acceptance in the market place. Daihatsu retains its niche position
in the market and new model introductions in the year ahead will consolidate its
standing. The re-introduction into the local market of MG and Rover has gone
well and sales are stronger than expected. While Citroen sales volumes were in
line with budget, establishment costs remain significant and losses were
incurred. However, we anticipate that the Citroen brand will expand its market
share significantly in the 2003 financial year.
The division has invested R140 million into dealer network infrastructure to
accommodate its distribution network. The percentage of imported vehicles sold
through the Imperial dealer network has increased to 77% and after-sales revenue
almost doubled as a result of the growing vehicle park.
For the year ahead, the division`s products should regain market share as prices
will once again be competitive. The division is well placed with an extensive
and diverse range of product offering across all market segments and, with a
more stable currency, we should see margins being restored.
MOTOR VEHICLE DEALERSHIPS
The division reported an outstanding year with revenue increasing by 29% to
exceed R10 billion for the first time. Operating profit rose by a larger
percentage (42%) to R302 million as the motor dealerships benefited from the
travails suffered in the imported vehicle market and the incentives offered by
the local automobile manufacturers. The South African drivers` appetite for
luxury motoring and 4 x 4s continues unabated. The mix of franchises and our 151
dealerships meant that at least one in seven new cars sold in South Africa in
the past year, or 14% of all the vehicles sold in the period, was sold by an
Imperial dealer.
The total group network including Auto Pedigree and Tyco sold 50239 new vehicles
during the year, an increase of 6,3% on the previous year, while used vehicle
sales rose 15% to 35214 units. The margins on used vehicles are more attractive
than on new vehicles and allow the group to offer customers a range of
additional products and services. Total units sold amounted to 85453 vehicles,
an improvement of 9,9%.
The used car market is growing rapidly as new entrants, many of them
historically disadvantaged South Africans, broaden the customer base. After-
sales and parts service is particularly important in this market and the
division attaches great importance to providing clients with service excellence,
including financial services such as finance and insurance protection products.
Great progress has been made in the division which looks ahead to another good
year. With its extensive range of brands the division is well placed to
participate in the growth of the economy.
INSURANCE
The division`s revenue rose strongly, by 35% to over the R1 billion mark for the
first time and both insurance companies showed strong underwriting results. The
investment income was lower than the previous year as the declaration of R275
million in dividends to reduce the capital employed in these businesses in the
previous financial year, impacted on the base from which investment income could
be earned. The second half results reflect a marked improvement over the first
six months performance due to the improved investment climate and better
underwriting. The division is operating off a smaller base to optimise the
capital employed in the business and its return on equity was 21%.
Regent Life Assurance`s premium income grew strongly, by 70%, to R363 million at
the year-end with outstanding growth in the core credit life business. Group
risk business is building steadily and individual life product development is
poised to become another growth area. The R105 million dividend declared last
year reduced the company`s capital base and affected investment results as did
the poor climate for investments. Policyholder portfolios are now being
structured prudently so as to more appropriately match assets with liabilities.
Gross premiums at Regent Insurance Company, an underwriter of comprehensive
motor and commercial vehicle insurance, rose by 25% to R736 million and net
premiums by 24% to R340 million. The underwriting result of R37 million is well
ahead of the 2001 figure of R20 million but investment income declined as a
result of realised gains which accrued last year and the dividend of R170
million that was declared in June 2001. Regent experienced a substantial growth
in broker and agent sourced business and, while this business is of a general
nature, there is a large motor component in keeping with the group`s "mobility"
focused approach.
There are opportunities for further growth in both the life and short-term
businesses and in the year ahead we should enjoy the benefits of the greater
economies of scale following the restructuring process at Regent Insurance which
is almost complete.
ASSOCIATED COMPANIES
Imperial Bank, which for the full year is accounted for as an associate, had
another good year and total assets rose to R7 billion from R4,3 billion a year
earlier. Imperial`s share of the bank`s attributable profits amounted to R39
million. The provision for bad debts was increased largely as a result of poor
experience in the commercial vehicle and equipment finance books. The bad debt
experience in Imperial Bank`s core lending areas, the financing of motor
vehicles, aircraft and property, remained very satisfactory.
The bank returned R660 million to its shareholders at the end of June 2002 of
which Imperial received R329 million. The bank`s convertible debentures were
converted into ordinary capital in March 2002 and Nedcor paid Imperial R425
million for its 50,1% share of this.
The bank is currently financing 32% of motor vehicle deals in the group that
require financing and more than 40% of its motor business is now derived from
outside of the Imperial group. We believe that the bank has an excellent niche
position in its markets and its prospects are good.
Both Air Contractors Limited and ACL Aviation performed well.
EMPOWERMENT
Our group is building a strong commitment to affirmative action and good
progress has been achieved in Black Economic Empowerment. In particular,
Ukhamba, our empowerment partnership with historically disadvantaged employees,
has expanded its shareholder base to over 1700, has assets of R48 million and
achieved a pre-tax profit of R4million.
FUNDING
The creation of Safair Lease Finance, the joint venture to finance the expansion
of the aviation leasing business, has released significant capital. This,
coupled with the issue of R1,6 billion in corporate bonds and the sale of 50,1%
of Imperial Bank in the previous financial year, will position the group
favourably to pursue exciting growth opportunities.
OUTLOOK
We remain confident about the future of all our divisions, especially as the
trend to outsourcing is accelerating both within South Africa and
internationally and the outlook for tourism is positive. Our management is
ambitious about the group`s future and dedicated to achieving high growth and
quality performances from our businesses. We continue to see opportunities in
almost every area of the business and, given a fair wind, Imperial should again
report satisfactory results.
CAPITAL DISTRIBUTION
Notice is hereby given that the board of directors has proposed a capital
distribution of 120 cents per share instead of an ordinary dividend for the
period ending 25 June 2002, subject to approval being obtained from shareholders
for the distribution. A circular and notice of general meeting of shareholders
regarding the capital distribution will be posted to shareholders on Wednesday,
25 September 2002. Subject to the approval by shareholders of the company being
obtained, the last date to trade (cum distribution) will be Friday, 15 November
2002
ODD-LOT OFFER AND CAPITAL DISTRIBUTION
See details in a separate announcement published elsewhere in this newspaper.
L BOYD WG LYNCH AH MAHOMED
Chairman Chief executive Financial director
Non-executive directors
L Boyd (Chairman), P Abelkop, PL Erasmus, JR McAlpine, E Molobi, A Tugendhaft
Executive directors
WG Lynch (Irish), RL Hiemstra, AH Mahomed, GW Riemann (German), CE Scott
Executive committee
WG Lynch, RJ Bo ttger, MP de Canha, RL Hiemstra, AH Mahomed, CE Scott
Secretary
R Mumford
Business address and registered office
140 Boeing Road East, Elma Park, Edenvale 1609
Share transfer secretaries
Computershare Investor Services Limited
(Registration number 1958/003546/06)
11 Diagonal Street, Johannesburg 2001
Sponsor
Merrill Lynch SA (Pty) Limited
(Registration number 1995/00185/07)
138 West Street, Sandown, Sandton 2196
Imperial Holdings Limited
(Registration number 1946/021048/06)
Share code: IPL ISIN code: ZAE 000003620
This announcement, together with a financial presentation, is available on the
Imperial Holdings website at:
http://www.imperial.co.za
INCOME STATEMENT for the years ended 25 June
2002 2001 %
Rm Rm change
Revenue 28 122 21 874 29
Profit from operations before
depreciation and recoupment 3 305 2 624
Depreciation and recoupments (1 021) (801)
Operating profit 2 284 1 823 25
Foreign exchange gains 59 48
Goodwill amortisation (57) (23)
Profit before net financing
costs 2 286 1 848 24
Net financing costs (500) (428)
Income from associates 65 42
Profit before exceptional items 1 851 1 462 27
Exceptional items 3 92
Profit before taxation 1 854 1 554 19
Taxation 484 291
Profit from ordinary activities 1 370 1 263 8
Minority interest 119 60
Net profit for the year 1 251 1 203 4
Cents Cents
Earnings per share*
- Basic 588,6 566,1 4
- Diluted 585,1 561,4
Headline earnings per share*
- Basic 608,8 527,6 15
- Diluted 605,3 523,3
Earnings per share
reconciliation*
Headline earnings per share
before restatements
outlined below 608,8 535,0
Change in accounting policies
to comply with new accounting
standards# (7,4)
608,8 527,6
Goodwill amortisation (24,0) (7,3)
Profit on sale of property,
plant and equipment 2,0 2,8
Exceptional items 1,8 43,0
588,6 566,1
*Based on the weighted average number of shares in issue
The consolidated financial statements are prepared in accordance with and comply
with Statements of Generally Accepted Accounting Practice in South Africa
effective for the group`s financial year.
#CHANGE IN ACCOUNTING POLICY
The group implemented the revised AC116 (employee benefits) in relation to the
leave pay provision which requires that the total undiscounted cost of short-
term employee benefits expected to be paid for services rendered should be
accrued against the outstanding leave days due. This had the effect of reducing
profit for the 2001 year by R9 million and increasing the leave pay provision by
R49 million.
The group adopted AC 135 (investment properties) which requires that owner
occupied properties be depreciated in terms of AC123 (property, plant and
equipment). This had the effect of reducing profit for the 2001 year by R14
million and increasing accumulated depreciation by R71 million.
The group also adopted certain other accounting standards which became
mandatory, but did not affect the group during the period under review.
Except as stated above, the principal accounting policies adopted in the
preparation of this report are consistent in all material respects with those
applied in the previous financial year.
EXCEPTIONAL ITEMS
Profit on disposal of
Imperial Bank Limited 32 137
Banking provisioning regulation
adjustment (6)
Impairment of assets (8) (31)
Loss on sale of investments in
subsidiaries and associates (21) (8)
3 92
Additional information
Net asset value per share
(cents) 3 712 3 235
Number of shares (million)
- in issue 206,3 215,6
- weighted average 212,5 212,6
Income before taxation Rm Rm
This is stated after:
Crediting
Investment income 39 61
Net financing costs
Financial services businesses 35 142
Other operations - paid 603 572
- received (98) (144)
- capitalised (5)
- net 500 428
BALANCE SHEET at 25 June
2002 2001
Rm Rm
Property, plant and equipment 2 109 1 544
Intangible assets 606 280
Investments in associates and 1 067 1 234
Other investments and loans 836 710
Deferred tax assets 348 133
Leasing assets 4 532 3 388
Transport fleet 1 556 1 205
Vehicles for hire 580 538
Inventories 2 772 2 538
Trade and other receivables 3 940 3 249
Taxation in advance 90 49
Cash and cash equivalents 1 472 1 508
Total assets 19 908 16 376
Insurance funds 346 247
Interest-bearing borrowings 5 901 4 110
Retirement benefit obligations 238 160
Deferred taxation 489 232
Other liabilities 4 843 4 469
Total liabilities 11 817 9 218
Net assets 8 091 7 158
FUNDED BY
Shareholders` equity 7 658 6 975
Minority interest 433 183
Total shareholders` equity 8 091 7 158
Supplementary information
Investments in associates and
joint ventures
At carrying value 429 243
Loans 638 991
1 067 1 234
Other investments and loans
Listed at market value 460 419
Unlisted at directors` valuation 187 194
Loans receivable 198 112
Capital expenditure 4 474 3 801
Capital commitments 285 214
Contingent liabilities 141 83
Lease commitments 971 794
ABRIDGED CASH FLOW for the years ended 25 June
2002 2001
Rm Rm
Cash flow from operating activities
Generated by operations 2 808 2 247
Net financing costs (500) (428)
Dividends paid (265) (22)
Taxation paid (412) (252)
Net cash flow from operating activities 1 631 1 545
Cash flow from investing activities
Acquisition of subsidiaries and businesses (453) (210)
Proceeds on sale of subsidiaries and
businesses (3) 282
Expansion of property, plant and equipment (420) (407)
Expansion of leasing assets (1 273) (940)
Expansion of transport fleet (354) (211)
Expansion of vehicles for hire (111)
Net replacement of property, plant
and equipment (58) (116)
Net replacement of leasing assets (277) (366)
Net replacement of transport fleet (92) (116)
Net replacement of vehicles for hire (263) (191)
Net acquisition of intangibles (17) (58)
Additional investment in and loans from
subsidiary and associated companies, net
of disposals 280 (147)
Purchase of equities and loans advanced (660) (350)
Proceeds from disposal of investments 737 438
Net cash flow used in investing activities (2 853) (2 503)
Cash flow from banking activities 626
Cash flow from financing activities
Cash flow from the issue of shares and
repayment of minorities 38 6
Purchase of treasury stock (497)
Capital distribution (227)
Decrease in banking cash (265)
Increase in long-term borrowings 1 311 773
Net cash flow from financing activities 625 514
Net (decrease)/increase in cash and cash
equivalents (597) 182
STATEMENT OF CHANGES IN EQUITY for the year ended 25 June
Share Non-
capital and distributable Distributable
premium reserve reserve Total
Rm Rm Rm Rm
Balance at 25 June
2001 (as restated) 3 595 127 3 253 6 975
Net gains arising on
translation of
foreign operations
not recognised in
the income statement 352 352
Net profit for the year 1 251 1 251
Share of retained
earnings of associates 44 (44)
Realised gains on sale
of subsidiaries (2) 2
Contingency reserve 6 (6)
Issue of 594 266
ordinary shares 20 20
Purchase of 9 865 135
ordinary shares (497) (497)
Capital distribution
of 110 cents per
share (227) (227)
Dividend of 100
cents per share (216) (216)
Balance at 25 June
2002 2 891 527 4 240 7 658
SEGMENTAL INFORMATION 25 June
INCOME STATEMENT
Logistics and Leasing and Aviation
Group transport fleet leasing
management
2002 2001 2002 2001 2002 2001 2002 2001
Rm Rm Rm Rm Rm Rm Rm Rm
Business
segmentation
Revenue 28 122 21 874 10 090 8 299 1 414 1 169 2 021 1 453
Inter-segment
revenue 307 446 175 120 5 7
28 122 21 874 10 397 8 745 1 589 1 289 2 026 1 460
Operating
expenses 24 856 19 311 9 661 8 143 867 683 1 520 1 158
Realised and
unrealised
gains on
investments (39) (61)
Depreciation 1157 908 364 316 359 258 174 127
Recoupments (136) (107) (71) (54) (39) (7) (1) (23)
Operating
profit 2 284 1 823 443 340 402 355 333 198
Foreign
exchange
gains 59 48 32 34 3 3 7
Goodwill
amortisation (57) (23) (35) (20)
Profit before
net financing
costs 2 286 1 848 440 354 405 355 336 205
Net financing
costs (500) (428) (97) (64) (123) (109) (159) (99)
Income from
associates 65 42 20 (3) 15 8
Profit before
exceptional
items 1 851 1 462 363 287 282 246 192 114
GEOGRAPHIC
SEGMENTATION
Revenue 28 122 21 874 10 090 8 299 1 414 1 169 2 021 1 453
- South
Africa 20 942 16 428 3 618 3 392 1 058 905 2 021 1 453
- Rest of
Africa 767 497 339 160 148 148
- Rest of
World 6 413 4 949 6 133 4 747 208 116
Operating
profit 2 284 1 823 443 340 402 355 333 198
- South
Africa 2 056 1 650 305 214 340 308 333 198
- Rest of
Africa 93 69 13 12 36 35
- Rest of
world 135 104 125 114 26 12
* In the prior year Imperial Bank Limited has been consolidated for six months.
The Group`s 49,9% holding since January 2001 has been equity accounted.
BALANCESHEET
BUSINESS SEGMENTATION
ASSETS
Property,
plant and
equipment 2 109 1 544 1 149 816 73 51 64 60
Intangible
assets (inc.
goodwill) 606 280 348 253 20 19 3
Investments,
loans and
associates 1 547 841 83 16 3 3 534 27
Leasing
assets 4 532 3 388 1 916 1 450 2 425 1 695
Transport
fleet 1 556 1 205 1 599 1 248
Vehicles for
hire 580 538
Inventories 2 772 2 538 118 101 236 175 301 268
Trade and
other
receivables 3 940 3 249 2 676 2 004 230 165 335 329
Cash in
financial
services
businesses 246 271
Operating
assets 17 888 13 854 5 973 4 438 2 478 1 863 3 662 2 379
Deferred tax
assets 348 133
Loans to
associates
and other
investments 356 1 103
Taxation in
advance 90 49
Cash and cash
equivalents 1 226 1 237
Total assets
per balance
sheet 19 908 16 376
LIABILITIES
Insurance
funds 346 247
Retirement
benefit
obligations 238 160 238 160
Accounts
payable and
provisions 4 616 4 255 2 479 2 027 377 277 469 377
Non-interest
bearing
liabilities 5 200 4 662 2 717 2 187 377 277 469 377
Interest
bearing
borrowings 5 901 4 110
Deferred tax
liabilities 489 232
Current tax
liabilities 227 214
Total
liabilities
per balance
sheet 11 817 9 218
GROSS CAPITAL
EXPENDITURE 4 474 3 801 1 161 939 1 279 1 024 939 718
Less:
Proceeds on
disposal (1 720)(1 285)(442) (250) (545) (451) (40) (83)
NET CAPITAL
EXPENDITURE 2 754 2 516 719 689 734 573 899 635
GEOGRAPHIC
SEGMENTATION
OPERATING
ASSETS 17 888 13 854 5 973 4 438 2 478 1 863 3 662 2 379
- South
Africa 14 639 11 498 3 650 2 790 1 822 1 482 3 662 2 379
- Rest of
Africa 567 400 220 146 175 132
- Rest of
world 2 682 1 956 2 103 1 502 481 249
INTEREST
