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CMH
CMH
Combined Motor Holdings - Reviewed results for the year ended 28 February 2006
COMBINED MOTOR HOLDINGS LIMITED
(Registration number 1965/000270/06)
(Share code: CMH ISIN: ZAE000001541)
("the Company" or "the Group")
Reviewed results for the year ended 28 February 2006
* 28% compound growth over nine years
* 51% increase in profit from operations
* 45% increase in headline earnings per share
* 45% increase in recommended dividend
* ninth successive year of earnings growth
GROUP FINANCIAL HIGHLIGHTS
%
2006 2005 Change
Revenue (R"000) 6 756 951 4 454 213 52
Profit from operations
- as restated (R"000) 252 711 167 187 51
- as previously reported (R"000) 252 711 172 450 47
Basic earnings per share
- as restated (cents) 786,1 544,5 44
- as previously reported (cents) 786,1 546,1 44
Diluted basic earnings per share
- as restated (cents) 755,2 524,9 44
- as previously reported (cents) 755,2 526,4 43
Headline earnings per share
- as restated (cents) 775,6 535,6 45
- as previously reported (cents) 775,6 561,1 38
Diluted headline earnings per share
- as restated (cents) 745,1 516,3 44
- as previously reported (cents) 775,6 540,9 43
Recommended dividend per share (cents) 210 145 45
Total assets
- as restated (R"000) 1 766 828 1 154 845 53
- as previously reported (R"000) 1 766 828 1 140 834 55
ABRIDGED GROUP INCOME STATEMENT
2006 2005
R"000 R"000
Revenue 6 756 951 4 454 213
Cost of sales (5 728 309) (3 829 886)
Gross profit 1 028 642 624 327
Other income 2 565 2 000
Selling and administration expenses (778 008) (459 837)
Share of results of associate company (488) 697
Profit from operations 252 711 167 187
Profit from operations to turnover (%) 3,7 3,8
Investment income 10 767 9 631
Finance costs (23 498) (12 533)
Profit before taxation 239 980 164 285
Taxation (73 870) (51 573)
Net profit 166 110 112 712
Attributable to:
Equity holders of the Company 165 157 112 435
Minority interest 953 277
166 110 112 712
Reconciliation of headline earnings
Net profit attributable to equity holders 165 157 112 435
Non-trading items
- capital profit on sale of business (2 565) (2 500)
less: capital gains taxation 363 161
(2 202) (2 339)
- impairment of goodwill - 500
Headline earnings 162 955 110 596
ABRIDGED GROUP CASH FLOW STATEMENT
2006 2005
R"000 R"000
Cash flows from operating activities 116 109 137 365
Cash flows from investing activities (263 391) (47 396)
Cash flows from financing activities (1 675) 1 296
Net movement in cash resources (148 957) 91 265
Cash resources at beginning of year 282 891 191 626
Cash resources at end of year 133 934 282 891
ABRIDGED GROUP BALANCE SHEET
2006 2005
R"000 R"000
Assets
Non-current assets
Plant and equipment 57 621 25 856
Investment in associate company 1 082 488
Goodwill 153 174 29 450
Deferred taxation 27 614 16 873
Current assets 1 527 337 1 082 178
Total assets 1 766 828 1 154 845
Equity and liabilities
Capital and reserves
Share capital and reserves 477 141 346 851
Minority interest 1 289 286
Total equity 478 430 347 137
Advance from minority shareholders 4 668 625
Life assurance funds 32 639 21 987
Lease liabilities 44 099 31 830
Current liabilities 1 206 992 753 266
1 766 828 1 154 845
RECONCILIATION OF NET PROFIT FOR THE YEAR ENDED 28 FEBRUARY 2005
Previously Adjustments Previous
stated in respect of IAS 17 SA GAAP
R"000 R"000 R"000
Revenue 4 454 213 - 4 454 213
Operating profit before
taxation 169 548 (6 581) 162 967
Non-trading items (2 950) - (2 950)
Profit before taxation 166 598 (6 581) 160 017
Taxation (53 547) 1 974 (51 573)
Net profit 113 051 (4 607) 108 444
Attributable to:
Equity holders of the
Company 112 757 (4 590) 108 167
Minority shareholders 294 (17) 277
113 051 (4 607) 108 444
Effect of
transition to IFRS IFRS
R"000 R"000
Revenue - 4 454 213
Operating profit before taxation (682) 162 285
Non-trading items 4 950 2 000
Profit before taxation 4 268 164 285
Taxation - (51 573)
Net profit 4 268 112 712
Attributable to:
Equity holders of the Company 4 268 112 435
Minority shareholders - 277
4 268 112 712
GROUP STATEMENT OF CHANGES IN EQUITY
Non-distributable Share-based Retained
Share capital reserve payment reserve earnings
R"000 R"000 R"000 R"000
Balance at
1 March 2004
as previously
reported 11 143 5 896 254 776
Operating lease
adjustment -
2004 and prior (17 674)
Balance at
1 March 2004
as restated 11 143 5 896 237 102
Issue of shares 1 251
Net profit
for the year,
as previously
reported 112 757
Operating
lease
adjustment
- 2005 (4 590)
Dividend paid (21 658)
Effect of
transition to
IFRS
- goodwill
amortisation
reversed 4 950
- share-based
payment
reserve 682 (682)
Balance at
28 February 2005
as restated 12 394 5 896 682 327 879
Issue of shares 2 081
Net profit
for the year 165 157
Dividend paid (38 586)
Share-based
payment reserve 1 638
Purchase of
minority interest
Sale of interest
to minority
shareholder
Balance at
28 February 2006 14 475 5 896 2 320 454 450
Minority
Total interest Total equity
R"000 R"000 R"000
Balance at 1 March 2004 as
previously reported 271 815 9 271 824
Operating lease adjustment - 2004
and prior (17 674) (17 674)
Balance at 1 March 2004 as restated 254 141 9 254 150
Issue of shares 1 251 1 251
Net profit for the year, as
previously reported 112 757 294 113 051
Operating lease adjustment - 2005 (4 590) (17) (4 607)
Dividend paid (21 658) (21 658)
Effect of transition to IFRS - -
- goodwill amortisation reversed 4 950 4 950
- share-based payment reserve - -
Balance at 28 February 2005 as
restated 346 851 286 347 137
Issue of shares 2 081 2 081
Net profit for the year 165 157 953 166 110
Dividend paid (38 586) (20) (38 606)
Share-based payment reserve 1 638 1 638
Purchase of minority interest (365) (365)
Sale of interest to minority
shareholder 435 435
Balance at 28 2006 477 141 1 289 478 430
SEGMENT ANALYSIS
TOTAL
2006 2005
R"000 % R"000 %
Revenue 6 756 951 100 4 454 213 100
Profit from operations 252 711 100 167 187 100
Finance costs (12 731) 100 (2 902) 100
Profit before taxation 239 980 100 164 285 100
Total assets 1 766 828 100 1 154 845 100
Total liabilities 1 288 398 100 807 708 100
Number of employees 2 771 100 1 842 100
Expenditure on plant and equipment 49 964 100 15 804 100
Goodwill acquired 123 725 100 22 500 100
RETAIL MOTOR
2006 2005
R"000 % R"000 %
Revenue 6 333 691 94 4 283 883 96
Profit from operations 191 781 76 135 601 81
Finance costs (30 716) 241 (19 500) 672
Profit before taxation 161 065 67 116 101 71
Total assets 1 082 619 61 547 223 47
Total liabilities 739 687 57 429 503 53
Number of employees 2 356 85 1 606 87
Expenditure on plant and equipment 42 102 84 14 144 89
Goodwill acquired 91 182 74 22 500 100
CAR HIRE
2006 2005
R"000 % R"000 %
Revenue 168 048 2 125 739 3
Profit from operations 21 527 9 15 657 9
Finance costs (1 081) 8 (2 620) 90
Profit before taxation 20 446 9 13 037 8
Total assets 437 632 25 319 992 28
Total liabilities 426 817 33 333 985 41
Number of employees 222 8 181 10
Expenditure on plant and equipment 1 876 4 1 301 8
Goodwill acquired - - - -
MARINE AND LEISURE
2006 2005
R"000 % R"000 %
Revenue 155 422 2 - -
Profit from operations 14 414 6 - -
Finance costs (3 751) 29 - -
Profit before taxation 10 663 4 - -
Total assets 152 012 9 - -
Total liabilities 53 433 4 - -
Number of employees 127 5 - -
Expenditure on plant and equipment 5 009 10 - -
Goodwill acquired 32 543 26 - -
FINANCIAL SERVICES
2006 2005
R"000 % R"000 %
Revenue 29 918 - 20 120 -
Profit from operations 15 605 6 15 195 9
Finance costs 2 259 (18) 1 755 (60)
Profit before taxation 17 864 8 16 950 10
Total assets 46 583 2 33 632 3
Total liabilities 36 188 3 24 698 3
Number of employees 3 - 3 -
Expenditure on plant and equipment - - - -
Goodwill acquired - - - -
CORPORATE SERVICES/OTHER
2006 2005
R"000 % R"000 %
Revenue 69 872 1 24 471 1
Profit from operations 9 384 4 734 -
Finance costs 20 558 (161) 17 463 (602)
Profit before taxation 29 942 13 18 197 11
Total assets 47 982 3 253 998 22
Total liabilities 32 273 3 19 522 3
Number of employees 63 2 52 3
Expenditure on plant and equipment 977 2 35 2
Goodwill acquired - - - -
COMMENT ON RESULTS
1. Favourable economic conditions, combined with record national new vehicle
unit sales, have spurred the Group to its ninth successive year of earnings
growth. The retail motor division achieved a pleasing 42% increase in
operating income off a high base, and with a full year"s contribution from
the businesses acquired during the year, is expected to improve further in
the year ahead.
2. National Car Rental/Alamo increased its revenue by 34% and its operating
margin from 12,5% to 12,8%. This division has improved progressively over
the six years since its inception and, with a solid and extensive network of
outlets, has the capacity to further increase its revenue with little
increase in its expense base.
3. The marine and leisure division was acquired during October 2005 and the
Group enjoyed the benefits of five "high" season summer months during the
year under review. The Water world and Monaco Leisure trading outlets are
well established and, with the introduction of new products and a
concentration on operating efficiencies, this division will make a
meaningful contribution in the years ahead. The distribution arm, CMH
Recreational Products, has the import and distribution rights for a wide
range of prestigious and popular marine and leisure products and has proved
to be a solid and stable performer.
4. Revenue from financial ser vices increased 48% to R29,9 million. This
division consistently returns good annuity-type returns. It is not expected
to outperform the retail operations but, being of a longer-term nature, will
assist to shield the Group against declining income should trading
conditions deteriorate significantly.
5. The Group outlaid R243 million to acquire new operations during the year.
The majority of that was spent during October 2005 on the purchase of the
Forza Group operations. Despite this outlay, Group cash flow remains strong
and a high management priority. The Group ended the year with cash resources
in excess of R133 million which will enable it to pursue further
acquisitions should the opportunities arise.
6. The directors are confident that, boosted by the expected earnings from the
new businesses, and with continued focus on those areas that have yielded
good returns in previous years, the Group will continue to deliver earnings
growth in line with shareholders" expectations.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
1. The results of the Group for the year ended 28 February 2006 have been
prepared in accordance with International Financial Reporting Standards
(IFRS) and the Listing Requirements of the JSE Limited. The Group is
reporting under IFRS for the first time in respect of the annual financial
statements for the year ended 28 February 2006. The Group"s transition date
is 1 March 2004 and IFRS 1 - First Time Adoption of International Financial
Reporting Standards has been applied in preparing this financial
information. At transition date IFRS 1 allows a number of exemptions to the
retrospective application principle on adoption of IFRS. The Group made the
following elections relating to the transitional arrangements;
1.1 Business combinations - the Group has elected not to apply the
retrospective application requirements of IFRS 3 in respect of business
combinations that occurred prior to 1 March 2004. Adjustments to
goodwill were made in terms of IFRS 3. Refer to discussion below.
1.2 Property, plant and equipment - no adjustment to the value of property,
plant and equipment has been made as the residual value and useful
lives of the assets are considered reasonable in terms of IAS 16 -
Property, Plant and Equipment.
1.3 Share-based payments - the Group has elected not to apply the
provisions of IFRS 2 - Share-based Payments, to employee share option
scheme awards granted on or before 7 November 2002.
Comparative figures have been restated where applicable.
2. The annual financial statements for the year ended 28 February 2005 were
prepared in accordance with South African Statements of Generally Accepted
Accounting Practice (SA GAAP). SA GAAP differs in some areas from IFRS. A
reconciliation and description of the effects of the transition from SA GAAP
to IFRS on the Group"s equity and net profit is reflected below.
3. The following new accounting policies were applied for IFRS reporting:
3.1 Business Combinations - Goodwill arising on business combinations is no
longer amortised on an annual basis, but is subject to regular
impairment testing. In respect of the year under review no impairment
charge is considered necessary. Goodwill amortised in the prior year
has been reversed.
3.2 Share-based Payments - The fair value of share options granted to
employees after 7 November 2002 and which had not vested on 1 January
2005, is recognised as a charge in the income statement over the
vesting period, with a corresponding increase in share-based payment
reserve in equity. The expense will be adjusted at the end of each
reporting period to reflect actual and expected levels of vesting.
The proceeds received, net of any directly attributable transaction
costs, will be credited to share capital when the options are
exercised. This expense was not previously recognised and comparative
figures have been restated.
4. Restatement in respect of IAS 17
The manner of recognising lease payments has been changed following the
issue by SAICA of circular 7/2005 as the result of a change in
interpretation of IAS17 (AC105) by South African companies to align with the
practice applied internationally. The effect of the revised interpretation
is that operating lease payments will be recognised as an expense on a
straight-line basis over the lease term, and not as cash is paid.
Comparative figures have been restated and the impact, after taxation, is
reflected in the statement of changes in equity.
DIVIDEND DECLARATION
A dividend (dividend number 38) of 210,0 cents per share will be paid on
Monday, 19 June 2006 to members reflected in the share register of the Company
at the close of business on the record date Thursday, 15 June 2006. Last day to
trade "cum" dividend is Thursday, 8 June 2006. First day to trade "ex" dividend
is Friday, 9 June 2006. Share certificates may not be dematerialised or
rematerialised from Friday, 9 June 2006 to Thursday, 15 June 2006, both days
inclusive.
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 Listing
Requirements.
The information has been reviewed by PriceWaterhouseCoopers Inc., the Group"s
external auditors. A copy of their review report is available for inspection at
the Company"s registered office.
By order of the Board of Directors
SK Jackson BCom (Hons) (Tax Law), CA(SA)
Secretary
24 April 2006
Registered office: 1st Floor, CMH Building, 206 West Street, Durban, 4001
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
PO Box 61051, Marshalltown, 2107
Sponsor: PricewaterhouseCoopers Corporate Finance (Pty) Limited,
Private Bag X36, Sunninghill, 2157
Date: 24/04/2006 12:00:23 PM Produced by the JSE SENS Department
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