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Combined Motor Holdings Limited - Interim report for the six months ended 31
August 2004
COMBINED MOTOR HOLDINGS LIMITED
(Registration number 1965/000270/06)
(Share code: CMH ISIN number: ZAE000001541)
www.cmh.co.za
Interim report for the six months ended 31 August 2004
* 57% increase in net profit
* 43% increase in headline earnings
* 49% increase in recommended dividend
GROUP FINANCIAL HIGHLIGHTS
6 months 6 months 12 months
31 Aug 31 Aug Incr 29 Feb
2004 2003 % 2004
Revenue (R`000) 1 726 515 1 361 204 27 3 220 632
Operating profit
before finance
costs (R`000) 39 636 28 150 41 108 739
Weighted average
number of shares
in issue (`000) 20 580 20 386 1 20 402
Number of shares
for dilution
calculation (`000) 21 018 20 842 1 20 885
Earnings per
share (cents) 103,5 66,5 56 303,2
Diluted earnings
per share (cents) 101,4 65,0 56 296,2
Headline
earnings per
share (cents) 117,9 83,4 41 341,9
Diluted headline
earnings per
share (cents) 115,5 81,6 42 334,0
Recommended
dividend per
share (cents) 23,0 15,4 49 79,4
Total assets (R`000) 775 063 644 343 20 857 484
Net tangible
asset value per
share (cents) 1,323 1,075 23 1,287
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Aug 31 Aug 29 Feb
2004 2003 Incr 2004
R`000 R`000 % R`000
Revenue 1 726 515 1 361 204 27 3 220 632
Cost of sales (1 508 673) (1 184 248) 27 (2 678 637)
Gross profit 217 842 176 956 23 541 995
Selling and operating
expenses (178 206) (148 806) 20 (433 256)
Operating profit
before finance costs 39 636 28 150 41 108 739
Finance costs (2 925) (3 240) (10) (6 372)
Operating profit
before taxation and
non-trading items 36 711 24 910 47 102 367
Non-trading items (2 960) (3 450) (14) (7 882)
Profit before taxation 33 751 21 460 57 94 485
Taxation (12 335) (7 872) 57 (32 376)
Profit after taxation 21 416 13 588 58 62 109
Minority shareholders`
share of profit (106) (32) 231 (244)
Net profit 21 310 13 556 57 61 865
Reconciliation of
headline earnings
Net profit 21 310 13 556 61 865
Non-trading items 2 960 3 450 7 882
Headline earnings 24 270 17 006 43 69 747
GROUP STATEMENT OF CHANGES IN SHARE CAPITAL AND RESERVES
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Aug 31 Aug 29 Feb
2004 2003 2004
R`000 R`000 R`000
At beginning of period 272 302 225 500 225 500
Issue of shares - - 1 123
Net profit for period 21 310 13 556 61 865
Dividend paid (16 875) (13 047) (16 186)
At end of period 276 737 226 009 272 302
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Aug 31 Aug 29 Feb
2004 2003 2004
R`000 R`000 R`000
Cash flow from operating activities (21 544) (31 407) 66 645
Cash flow from investing activities (2 104) (2 396) (16 565)
Cash flow from financing activities - 5 667 (7 625)
Net cash flow for period (23 648) (28 136) 42 455
Cash and cash equivalents at
beginning of period 191 626 149 171 149 171
Cash and cash equivalents at end of
period 167 978 121 035 191 626
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Aug 31 Aug 29 Feb
2004 2003 2004
R`000 R`000 R`000
Long-term assets
Fixed assets 18 924 17 876 19 481
Amount owing by share trust 568 1 497 1 242
Intangible assets 4 490 6 941 7 450
Deferred taxation 5 054 4 365 7 159
29 036 30 679 35 332
Current assets 746 027 613 664 822 152
Total assets 775 063 644 343 857 484
Equity and liabilities
Total share capital and reserves 276 737 226 009 272 302
Minority shareholders` interest 733 469 627
Life assurance funds 18 592 - 16 829
Current liabilities 479 001 417 865 567 726
775 063 644 343 857 484
Total Retail motor
SEGMENTAL ANALYSIS
2004 2003 2004 2003
R`000 R`000 R`000 R`000
Revenue 1 726,515 1 361 204 1 660 570 1 313 338
Operating profit before
finance costs 39 636 28 150 35 893 31 059
Finance costs (2 925) (3 240) (8 127) (7 383)
Operating profit before
taxation and
non-trading items 36 711 24 910 27 766 23 676
Total assets 775 063 644 343 504 620 458 196
Total liabilities 497 593 417 865 347 131 312 982
Total employees 1 634 1 581 1 402 1 392
Car hire Financial services
SEGMENTAL ANALYSIS
2004 2003 2004 2003
R`000 R`000 R`000 R`000
Revenue 52 043 38 617 9 052 4 789
Operating profit before finance
costs 3 567 (832) 4 261 2 987
Finance costs (508) (601) 604 619
Operating profit before taxation
and non-trading items 3 059 (1 433) 4 865 3 606
Total assets 143 769 93 050 34 161 24 541
Total liabilities 113 456 72 743 23 292 19 681
Total employees 181 142 3 3
Corporate services
SEGMENTAL ANALYSIS
2004 2003
R`000 R`000
Revenue 4 850 4 460
Operating profit before finance costs (4 085) (5 064)
Finance costs 5 106 4 125
Operating profit before taxation and non-trading items 1 021 (939)
Total assets 92 513 68 556
Total liabilities 13 714 12 459
Total employees 48 44
COMMENTS ON RESULTS
1. The favourable trading conditions which prevailed during the latter part of
last year continued during the period under review. Prime overdraft rate reduced
to 11%, its lowest level in more than twenty years, and the currency exchange
rates held firm at strong levels. These external factors placed a brake on new
vehicle price increases and facilitated higher volume sales. A consequence of
the slowdown in new vehicle price increases has been the sharper decline in the
values of used vehicles.
Management has had to be particularly vigilant in the appraisal of trade-ins and
in ensuring a quicker turnover of used vehicle stock. However, despite these
efforts, reduced income was earned in the used car departments. The Group`s
parts and service divisions benefited from the buoyant conditions and both
produced good returns during the period.
2. The car hire division, National/Alamo Car Hire, has now reached the critical
mass level whereby the majority of its branches report a net profit even in the
off-peak winter season. The benefit of reduced holding costs, as a result of the
lower interest rate, was offset to an extent by the higher level of depreciation
necessitated by the sharper decline in used vehicle values. However, the
majority of the hire fleet is protected by manufacturer repurchase agreements.
Higher volumes and an improved daily rate have enabled this division to record a
substantial improvement over the comparative period.
3. Both the financial and corporate ser vices segments continued to show
pleasing growth, albeit off a low base. The Group`s two joint venture finance
arrangements proved highly successful, and the insurance businesses recorded
record returns. Cash flow was tightly controlled during the period under review.
Despite the utilisation of R35 million of cash resources to effect early
repayment of interest- bearing car hire creditors, and the payment of a dividend
of R16,8 million, the Group ended the period with cash resources of R168
million.
4. Whilst the directors are well satisfied with the results which have been
achieved, it must be borne in mind that the current returns are being compared
with the former half of 2003, a period during which particularly difficult
trading conditions prevailed. Economic factors improved considerably during the
second half of last year and the directors caution that it will take a
considerable effort for the Group to maintain the same rate of growth for the
full year. With effect from 1 September 2004 the Group acquired Umhlanga Auto, a
BMW dealer in motor vehicles and motor cycles and a BMW-approved vehicle repair
centre, for the sum of R29,3 million. This dealership is the Group`s second BMW
outlet and is expected to make a meaningful profit contribution.
5. An interim dividend (dividend number 35) of 23,0 cents per share will be paid
on Monday, 13 December 2004 to members reflected in the share register of the
Company at the close of business on the record date Friday, 10 December 2004.
Last day to trade `cum` dividend is Friday, 3 December 2004. First day to trade
`ex` dividend is Monday, 6 December 2004. Share certificates may not be
dematerialised or rematerialised from Monday, 6 December 2004 to Friday, 10
December 2004, both days inclusive.
6. The interim report has been compiled in accordance with South African
Statements of Generally Accepted Accounting Practices, and the accounting
policies are consistent with those used in previous years. 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 Securities Exchange listing requirements. The
report has not been audited or reviewed by the Company`s auditors.
By order of the Board of Directors
SK Jackson BCom (Hons) (Tax Law), CA(SA)
Secretary
4 October 2004
Registered office
1st Floor
CMH Building
206 West Street
Durban, 4001
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd
PO Box 61051
Marshalltown, 2107
Sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Limited
Private Bag X36
Sunninghill, 2157
Directors: M Zimmerman (Chairman), JD McIntosh (Managing), MPD Conway,
JTM Edwards, SK Jackson, RTAC Nethercott, CL Odendaal, A Rogoff
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