| Wed 30 Aug 2006, 7:00 | | Imperial - Audited Preliminary Results for the yea |
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IPL
IPL
Imperial - Audited Preliminary Results for the year ended 25 June 2006
Imperial Holdings Limited
Registration number 1946/021048/06
Share code: IPL
ISIN code: ZAE000067211
Imperial Holdings Limited Audited Preliminary Results
for the year ended 25 June 2006
Driving entrepreneurial momentum
Headline earnings per share up 26.1% to 1 222.1 cents
Revenue up 27.0% to R54.1 billion
Operating profit up 31.4% to R4.5 billion
Free cash flow increased by 33% to R3.2 billion
Distribution to shareholders up 20% to 474 cents
Overview
Imperial had another outstanding year with headline earnings per share rising by
26.1% after a 25% increase last year, bringing the 19-year compound growth rate
since listing to 29%. Revenue grew by 27.0% and operating profit by 31.4% with
the operating margin increasing to 8.2% from 8.0%.
While strong growth was recorded in our motor vehicle distribution and retail
operations and related financial services, our remaining mobility businesses
also produced good results.
Business conditions were favourable but competitive in all areas of our
business. Consumer demand for motor vehicles remained high with year-on-year
growth in new vehicle sales of 22% during our financial period. This was buoyed
by a growing consumer sector with real increases in salaries and wages amidst
flat vehicle prices and low interest rates. Demand was driven by affordability,
as well as growth in the urban middle class and the necessity for families to
own a private motor vehicle due to an inadequate public transport system.
Consumer spending is showing signs of cooling down following recent increases in
interest rates. Further rate increases are possible, but sales growth is
expected to continue, as the fundamental factors driving vehicle demand still
remain firmly in place.
We have increased our exposure to the infrastructure building and resources
sectors of the economy with the acquisition of the MCC group, which owns and
operates 1 039 units of earthmoving equipment. This acquisition, which was
effective from December 2005, has already made a positive contribution. In the
current climate of growth in construction and strong global demand for
commodities, we aim to increase our investment in this sector. Combining with
our vehicle leasing, fleet management and logistics operations, we expect to
benefit substantially from corporate and government spending patterns in South
Africa over the next four years.
Further new growth initiatives were launched in all parts of the group this
year, including the following acquisitions and new ventures:
* In the Logistics division, TFD Network Africa, a warehousing and
distribution business, Transmart, a specialised courier business, Bongani
Logistics, an empowerment logistics provider as well as the assets and long
term fuel distribution contracts of Bulktrans.
* Imperial Logistics International invested Euro3.8 million in trailer
equipment and spent Euro5.7 million on the expansion and upgrading of the
inland waterway fleet.
* In the Motor division, seven new car dealerships and three truck
dealerships were added in South Africa, and four Nissan dealerships were
acquired in Sweden. The division disposed of a dealership in East London to
a black empowerment group.
* The acquisition of Beekman Canopies, a manufacturer and distributor of
canopies for light commercial vehicles.
* Auto Pedigree in the Car Rental and Tourism division opened 5 used car
dealerships.
* The acquisition of Safedrive, a group of 36 franchised vehicle testing
stations in the Leasing and Fleet Management division.
* Tourvest acquired Cummings Travel, a travel agency in South Africa, as well
as a number of tourist destination assets in South Africa which combine
well with its inbound division. Outside South Africa, it acquired three
businesses engaged in wildlife tourism in Botswana and Zambia, interests
and agencies in the retail travel industry in Nigeria and Ghana, as well as
a retail merchandising chain in the Caribbean. Certain of the international
acquisitions are still subject to regulatory approval.
* In the United Kingdom, Imperial has acquired a group of companies from RAC
plc for a total consideration of approximately GBP50 million on a debt-free
basis. The businesses include Lex Commercials, a dealer in DAF trucks and
LDV vans, operating 22 dealerships and workshops, Lex Auto Logistics, based
near Manchester, engaged in auto parts warehousing and distribution, Lex
Fleetserve, a niche parts provider of supply chain services to selected
user groups, and Lex Multipart Defence, a provider of outsourcing and
warehousing services to the UK defence sector. The group had a combined
turnover of approximately GBP300 million in its year to December 2005, and
employs 1 340 people. The truck dealership group has been renamed Imperial
Commercials and the parts logistics businesses trade under the name
Multipart.
* Associated Motor Holdings in the Distributorships division opened 6
dealerships around the country. It was further awarded the Benzhou
franchise, with a competitively priced Chinese motor cycle, and it opened
its first Kawasaki retail outlet. Truck assembly capacity in the
Distributorships division was increased from 1 600 to 3 000 units per
annum. Four new service facilities were opened, the VDL Bus (powered by
DAF) was launched and the division concluded distributorship agreements
with King Long Bus and JAC Trucks from China.
Including acquisitions the group invested R1 214 million in real estate during
the year, bringing our total investment in well-located commercial, industrial
and office properties to R3.2 billion.
The value of the group"s insurance investments, inclusive of cash holdings,
amounts to R2 474 million, of which R1 479 million is in listed South African
and off-shore equities and bonds.
In total, Imperial"s net capital expenditure for the year amounted to R3 766
million, of which R2 662 million was for expansion.
Locally the group retailed 102 170 new and 56 166 used vehicles, respectively
33% and 26% more than last year. In addition, it sold 25 285 new vehicles to
outside dealers as a distributor, an increase of 93% over last year. The
Australian, Swedish and UK operations sold 12 595 new and 4 605 used vehicles.
In addition, sales by Imperial"s associates, Renault and Tata, amounted to 36
353 units.
Prior to the year-end, the company concluded a forward purchase agreement to
acquire Imperial shares. The company will take delivery of 4 961 389 shares
during November 2006 for a total purchase consideration of R655 million. Various
options are being considered for the funding of this amount, including the issue
of non-redeemable preference shares.
Financial results
International Financial Reporting Standards (IFRS)
These are the group"s first annual results reported under IFRS. The reduction in
the opening equity for June 2005 was R1 040 million as detailed in the
reconciliation of equity. The reduction in attributable profit for the year to
June 2005 was R156 million of which R95 million is a once-off charge relating to
the Lereko empowerment transaction. The net impact on equity for the year to
June 2005 was R61 million as the R95 million for the Lereko transaction is
credited to equity, being a share-based payment.
Review of group results
Income statement
Revenue increased by 27.0% to R54.1 billion against a background of little or no
inflation in our high-turnover vehicle businesses. The operating margin improved
from 8.0% to 8.2%. The main contributor to this increase was the Logistics
division, internationally due to the sale of the low-margin clearing and
forwarding business, JH Bachmann, and locally through increased operating
efficiencies.
EBITDA, at R6 090 million, was 27.3% up, but after depreciation which increased
by 17.4%, operating profit was 31.3% higher at R4 458 million. The foreign
exchange loss of R138 million (R7 million gain last year) was substantially
caused by the sharp drop in the Rand during May and June and related to the
revaluation of supplier liabilities on imports. The positive fair value
adjustments of R26 million (R107 million last year) were in respect of forward
exchange contracts. A negative adjustment of R74 million was provided against
the embedded derivative instrument relating to the Lereko Mobility transaction,
caused by the increase in the Imperial share price during the financial year.
During the second half, a positive adjustment of R9 million was recorded after a
charge of R83 million in the first half.
The net interest charge amounted to R782 million, an increase of 33.4%, which is
in line with the increase in interest-bearing debt.
Income from associates and joint ventures at R282 million was 51.6% higher,
aided by a good performance from Imperial Bank. Exceptional items of R53 million
were charged, relating mainly to impairments of goodwill compared to the R258
million gain last year, stemming mainly from the disposal of businesses.
The effective tax rate was 35.4%, compared to 33.8%. Contributing to the high
tax rate, was the non-deductibility of R160 million in interest and related
charges in respect of the Lereko BEE transaction, other non-deductible
expenditure, the higher tax rates prevailing in our international businesses,
STC and underprovisions in respect of prior years, as well as a charge of R36
million in respect of the non-deductibility of trademark write-offs in Tourvest.
While this charge is taken to equity in Tourvest, it has to be charged against
Imperial Holdings" income statement even though it is a pre-acquisition cost.
The group also has a contingent liability in respect of an assessment for R382
million relating to an off-shore company. We do not believe this is a valid
claim and will oppose the assessment.
Income attributable to minorities increased by 23.3%. The largest minority
holdings are in Tourvest and Associated Motor Holdings.
Headline earnings at R2 291 million increased by 18%, but as a result of the
lower number of shares in issue after the Lereko transaction (see below),
headline earnings per share improved by 26.1%.
Accounting for the Lereko transaction
This transaction, in terms of which Lereko Mobility, 51% owned by a black
consortium and 49% by Imperial, acquired 14.5 million Imperial shares from
existing shareholders, is accounted for as a share buy-back. Due to the
structure of the funding mechanism, Imperial consolidates Lereko Mobility and
treats the full number of shares as treasury stock, thereby reducing the
weighted average number of shares in issue by 14.5 million shares to 187.5
million. Against the reduced number of shares in issue, the full funding cost of
the transaction, comprising preference dividends as well as interest and an
equity- linked interest bonus on the Lereko debentures, is included as charges
to the income statement. Provision for the equity-linked interest bonus amounted
to R74 million, calculated as 25% of the amount by which the value of an
Imperial share exceeds R145.25 in October 2010, multiplied by 14.5 million,
being the number of Lereko debentures in issue. In determining this amount, the
rise in the Imperial share price from R101.80 in June 2005 to R128.50 in June
2006 had a significant impact.
A once-off charge of R95 million on the Lereko transaction was absorbed in 2005
as a share-based payment in terms of IFRS. This positively impacted on the
reported rate of growth in headline earnings per share for 2006.
As restated the return on equity was 25.6% compared to 23,0% last year.
Balance sheet and cash flow
Net interest-bearing debt at R9 069 million increased by R2 550 million over
2005. Some components of this increase are the following:
* Acquisitions of R771 million and their accompanying debt of R553 million.
* Expansion capital expenditure of R2 662 million, inter alia contributing to
the 17% growth in our vehicle fleets from 46 348 to 54 104 units.
* Facilitating the Lereko transaction with R598 million.
* Funding the working capital requirements of the growth in revenue in our
Distributorships division, which by its nature as an importer, distributor
and dealer in motor vehicles has a long working capital cycle, as well as
strong growth in revenue in the Dealerships division. Combined, these
divisions had revenues of R31.0 billion compared to R21.7 billion in the
previous period.
* The funding of the purchase of Imperial shares in terms of the Executive
Share Purchase Scheme to the value of R454 million.
* Interest-bearing debt increased by R267 million being the value of cross-
currency swaps on the Eurobond issues referred to below which cannot be set
off against the matching asset for accounting purposes.
On 19 April, Imperial issued a 7-year bond of 300 million in Europe, partially
to fund our off-shore operations. The portion which was repatriated to South
Africa has been hedged against currency fluctuations.
Net debt/equity, on the basis that the equity settled debt of R794 million
relating to the Lereko transaction is treated as equity is calculated at 78%,
compared to 65% on a similar basis last year. If the equity settled debt was
treated as debt, the ratio would be 91% (2005: 78%).
Imperial Capital raised R1 373 million of debt capital during the year, R1
billion by way of 4 year corporate paper and the balance in 90-day commercial
paper. Its current equity, inclusive of subordinated interest bearing
intercompany funding, amounts to R644 million. It has registered a R6 billion
Domestic Medium-Term Note Programme with the Bond Exchange of South Africa to
establish its long-term borrowing capacity. Imperial Capital obtained strong
short and long-term credit ratings from Moody"s, the long-term rating being one
credit level higher than the wider group"s main borrowing entity. Imperial
Capital is a ring-fenced entity which owns fleet assets employed in the Car
Rental, Logistics and Leasing divisions. R2.1 billion worth of these assets have
thus far been transferred to Imperial Capital, giving this company a debt/equity
ratio of 213%. When assessing the gearing in Imperial excluding Imperial Capital
(on the basis of equity settled debt being treated as equity), the debt: equity
ratio amounts to 70%. Asset growth in Imperial Capital will be phased towards
owning most of the group"s non-aviation revenue-earning fleets, which amounted
to approximately R7.8 billion at June 2006. We are confident that this entity
will gradually start to make a valuable contribution to the debt capital
structure and borrowing costs of the group.
Cash flow from operating activities increased by 28.4% to R4 255 million. Whilst
over 70% of cash utilised for investing activities was applied towards the
expansion of the group, free cash flow generated increased by 33% to R3 151
million.
Review of divisions
Logistics
Rm 2006 2005 % change
Revenue 12 426 12 721 (2)
Operating profit 763 664 15
Operating margin (%) 6.1 5.2
Operating asset 7 702 7 016 9
The decline in turnover is attributable to the sale of JH Bachmann at the end of
the previous financial year. The growth in margin and operating profit was
highly satisfactory.
In Southern Africa, revenue grew by 15.1% to R7 252 million and the operating
margin grew from 7.4% to 7.9%, despite intensified competition and higher fuel
prices. This was achieved through volume increases on several fronts, buoyant
consumer spending, labour stability and increased efficiencies. Higher margins
were also earned from servicing larger segments of our customers" supply chains.
Outsourcing opportunities within the current customer base remain an important
source of revenue and profit growth for the future.
In our European operations, we benefited from the trend towards global sourcing
and integrated production systems where Imperial Logistics International has
profound knowledge and experience in the automotive and steel industries.
Adjusted for the sale of JH Bachmann, International Logistics was able to grow
revenue by 8.6% and operating profit by 30.5%. All subdivisions experienced
strongly increasing volumes. The rising fuel costs could generally be passed on
to the clients.
While consumer spending growth may decline in South Africa, we expect to see
further real growth in our customers" demand for logistics services from which
we expect to benefit. Internationally, we are confident of further growth and
profitability from continuing demand growth and increased efficiencies.
Leasing and Fleet Management
Rm 2006 2005 % change
Revenue 3 028 2 301 32
Operating profit 540 456 18
Operating margin (%) 17.8 19.8
Operating asset 5 171 3 736 38
Market conditions for this division remained challenging, with low inflation,
low interest rates and increased competition from vehicle manufacturers in
certain of our core markets. Demand for fleet management outsourcing was also
sluggish, but the diversity of the division and its new ventures ensured a very
respectable performance.
Excluding the 1 039 new fleet units from the MCC acquisition, owned vehicles and
forklifts in the division increased by 8.5% from 26 960 to 29 252, which
represented good growth in market share.
The performance of our vehicle disposal retail chain, HyperCar, continued to
disappoint due to an incorrect stock mix, softening residual values and
inadequate gross margins. The business was restructured; branches and stock
levels were reduced. We are confident that the remaining 17 outlets will turn to
profitability in the new year.
The forklift business in Southern Africa delivered a fine performance, but the
results from Impact Forklift in the UK were below expectation in a flat market.
In South Africa, pricing was under pressure due to the strong Rand and price
reductions limited revenue growth to 13% whilst record unit sales were achieved.
We are still supplying vehicles in terms of the RTG contract with certain
national government departments under an extension of the contract that
officially expired at the end of May 2005. We anticipate some further revenue in
our 2006/2007 financial year in terms of this contract.
The unpaid debt of the National Prosecuting Authority remains unresolved. Legal
action has been instituted and a positive outcome is anticipated.
The acquisition of a controlling interest in the MCC Plant Hire and Mining
Contracting group has proven to be a good strategic fit with our business and
has performed to expectation. We are pleased with the opportunities created by
this acquisition to expand our exposure to significant infrastructure spending
in both the public and private sectors in Sub-Saharan Africa in the foreseeable
future.
We expect macro factors such as higher interest rates and vehicle prices to
create new opportunities for us in fleet management and facilitate margin
improvement. In addition, we will pursue further opportunities in South Africa
and the rest of Africa in other mobility-related industrial, mining and
construction equipment.
Aviation
Rm 2006 2005 % change
Revenue 3 349 2 699 24
Operating profit 280 265 6
Operating margin (%) 8.4 9.8
Operating asset 3 786 3 304 15
Safair"s results were negatively impacted by continued Rand strength throughout
the year, with approximately 55% of revenue being dollar based, despite a
significant depreciation in the Rand shortly before year-end. Perversely, the
late Rand weakness negatively impacted SLF"s results on the revaluation of
foreign loans and related financial instruments. The total charge for the year
in Safair Lease Finance relating to this change amounted to R42 million (2005:
Loss of R2 million).
Safair"s operational performance improved throughout the year, with improved
service reliability in the locally operated fleet and the Hercules fleet. During
the latter half of the year year eight B737-200 aircraft reached the end of
their dry-lease period with SAA and were returned resulting in some financial
pressure. Market conditions have been tough for the sale or lease of the
aircraft. Three of these aircraft have been sold and 5 have been placed on short
term leases. Safair realised a profit on the sale aircraft amounting to R47
million (2005: R52 million), including the sale of a Hercules aircraft.
NAC again had outstanding sales, and has a good order book for the new year.
However, margins have been under pressure due to the strength of the Rand. Poor
trading conditions and increased maintenance costs in the contracts market
negatively impacted results for both NAC and Naturelink, causing losses at the
latter.
Cost-cutting measures and improved processes and procedures have resulted in a
significant turnaround in the results of the Air Contractors group.
In the year ahead, Safair"s fleet upgrading plan, aimed at disposing of older
aircraft and replacing with fewer later-model aircraft on the back of long-term
leases, will continue. Further trading in Hercules aircraft will also be
pursued.
Contract changes, stabilisation and a fleet review will be the primary focus in
NAC and Naturelink, which should result in a significant improvement in their
results.
Car Rental and Tourism
Rm 2006 2005 % change
Revenue 3 441 3 128 10
Operating profit 507 496 2
Operating margin (%) 14.7 15.9
Operating asset 2 312 1 864 24
Revenue growth in the car rental operation was satis-factory given extremely
competitive market conditions in an environment where rates were reduced.
Operating profit growth was impacted by a once-off R41 million reduction in
depreciation last year to bring residual values more in line with disposal
proceeds. This had the effect of reducing this year"s operating income growth by
9%. Profits were further impacted by excessive accident costs and reduced profit
margins on disposal of vehicles. However, through an increased market presence,
Auto Pedigree performed well, increasing revenue and profits.
Our panelshops, which are expanding their capacity, significantly improved
profitability through improved cost management. Imperial Chauffeur Drive
improved revenue during the year and introduced a new brand focusing on the
lower end of the market.
In the tourism market, trading conditions have been very difficult, with a
strong Rand, exacerbated by the unacceptable level of crime. We will continue to
expand existing markets and expand into markets in which we are not currently
represented. We will also replace and reconfigure our coach fleet in readiness
for expected turnaround in the tourism businesses, aided by an expected weaker
Rand.
Tourvest, the listed 67%-held subsidiary, also suffered from Rand strength, but
grew its headline earnings per share by 12%. Rationalisation in its inbound
division and a good performance by the outbound and retail merchandising
divisions supported the results. Profits from American Express foreign exchange
were down as a result of a decline in inbound US$ volumes.
Distributorships
Rm 2006 2005 % change
Revenue 16 009 9 655 66
Operating profit 1 503 923 63
Operating margin (%) 9.4 9.6
Operating asset 9 029 5 211 73
The division took advantage of favourable market conditions in the motor
industry, benefiting from sales growth in passenger vehicles, light commercial
vehicles, trucks, motorcycles and allied products. Profit margins were reduced
marginally.
Significant investment was made in dealerships, warehousing, logistics, staff
development and working capital to support the division"s unique business model
of combining the distribution function with retail dealerships. The division"s
financial services interests grew with the market and reached a level of
maturity which increased profitability.
The truck distribution business had a good year, with strong growth in unit
sales. We also benefited from strong growth in sales of motorbikes.
The nine Ford dealerships in Australia which were acquired late in the previous
financial year made a loss and a restructuring of the business is under way.
The results of the newly acquired UK operations, which took effect from 1 April
2006, are reported in this division.
Lectrolite continued to deliver a steady performance.
Dealerships
Rm 2006 2005 % change
Revenue 14 980 12 073 24
Operating profit 377 301 25
Operating margin (%) 2.5 2.5
Operating asset 3 269 2 320 41
This division, which represents all the local vehicle manufacturers as
franchisees, had an excellent year, also benefiting from strong demand for
vehicles. Despite high sales volumes, competition was tough, especially from
directly imported models.
The net margin remained at 2.5% which is satisfactory in view of static prices
and reducing gross margins on new vehicles amidst normal inflation pressure in
our overhead base. At the same time, the used vehicle market was tough as a
result of competition from entry-evel new vehicles. Income earned from the sale
of financial and ancillary products improved to compensate for the above.
Our Daimler Chrysler SA franchises remained the largest contributor to the
division"s profits, but growth was limited due to a number of factors including
substantial new investment in dealership facilities. This ongoing investment is
expected to yield improved results in the future. All other franchises performed
well with newer franchises like Honda beginning to contribute meaningfully.
We anticipate that the recent interest rate increases will cause revenue growth
in the division to slow. However, the much larger car parque of vehicles up to
four years old should benefit our service and parts businesses. We are also
focusing on related accessories businesses, having acquired Beekman Canopies,
effective from 1 June 2006. We also opened a Renault refurbishment centre in
Boksburg which provides this service to Renault SA. More such opportunities are
being sought.
Insurance
Rm 2006 2005 % change
Revenue 2 622 1 899 38
Operating profit 589 419 41
Operating margin (%) 22.5 22.1
Operating asset 3 742 2 962 26
High activity levels in the motor retail businesses contributed to strong growth
in premium income. Regent Insurance and Regent Life both gained market share and
increased profitability over previous years. The highest growth in sales
occurred from the group"s motor retail operations, where financial services
sales are strong and we enjoy a healthy share of the insurance market.
The achievement of good insurance results can be attributed to sound
underwriting and risk management processes.
Investment returns exceeded expectations, despite weakness in the equities
markets in the last two months of the financial year. We were exposed to a
relatively high equity content in our investment portfolios, which now stands at
59% of the total portfolio of R2 474 million including cash.
We expect that the National Credit Act, which will only begin to affect us late
in our 2007 financial year, will restrict the use of single-premium business.
This business comprises the majority share of credit life business conducted in
the dealer-based market. We are prepared for the implementation of the changes
brought about by the Act for the furtherance of consumer protection in the
industry. As a specialist in the dealer-based market, we expect to gain long-
term benefits from this important change in the industry.
Associates
Imperial Bank had an excellent year with our share of profit almost doubling to
R179 million. The Bank took advantage of favourable market conditions including
low interest rates and a benign credit environment.
Advances grew by 38% to R23.3 billion of which R14.6 billion is in motor
finance. Costs were well contained at 34.7% of income.
The recent increases in interest rates are likely to slow down the growth in
demand for motor vehicle finance. These rate increases are unlikely to have a
significant impact on the other divisions of the bank where demand continues to
be strong. In the second half of the year, bad debts were starting to reflect a
more normalised pattern against the unsustainably favourable pattern of the
first half. The interest rate increases are likely to re-enforce this trend.
Renault benefited from good marketing initiatives and increased its market share
under very competitive conditions with an attractive product range.
The group"s 50% share in Safair Lease Finance and the Air Contractors group
contributed R47 million compared to R31 million last year.
Ukhamba continues to progress and contributed R19 million (2005: R10 million).
The bulk of its contribution came from its 34% holding in Dawn Limited, but it
has investments in 15 other entities, which made a positive contribution.
Black Economic Empowerment
Approximately 15 000 black staff members participate in the acquisition by
Ukhamba Holdings of a 10.1% interest in Imperial. In terms of the scheme, a
further 1 721 529 preferred ordinary shares have converted to ordinary shares,
bringing the total Imperial ordinary shares held by Ukhamba to 3 461 530. Cash
distributions on these shares are paid to Ukhamba shareholders and the
beneficiaries.
Prospects
We feel positive about the coming year, despite the expected slowdown in
consumer spending and its effects on vehicle sales growth. The group has an
extensive exposure to the broader South African economy which is well positioned
for sustainable growth. Whilst the group benefits from a healthy consumer-led
upswing, it also benefits from different economic conditions which are beginning
to emerge. A substantial portion of the group"s debt carries fixed interest
rates, and higher interest rates benefit our leasing operations. The residual
values of our vehicle fleets are also better underpinned by a weaker Rand. A
weaker Rand also provides strong impetus to our aviation and tourism operations.
Internationally, we are well positioned in a strengthening German economy,
particularly driven by its steel exports to Asian economies and a relatively
strong automotive sector.
Accordingly, we expect another good year of growth in earnings.
By order of the board
L Boyd Chairman
W G Lynch Chief executive
A H Mahomed Financial director
Capital distribution
Ordinary shareholders
Notice is hereby given that a capital distribution of 244 cents per ordinary
share has been declared in terms of the general authority granted at the annual
general meeting of shareholders held on 1 November 2005 and is payable to
ordinary shareholders recorded in the registers of the company at the close of
business on Friday, 29 September 2006. In compliance with the requirements of
STRATE, the electronic settlement and custody system used by the JSE Limited,
the company has determined the following salient dates for the payment of the
capital distribution:
2006
Last day to trade
cum-capital
distribution Thursday, 21 September
Shares commence trading
ex-capital distribution Friday, 22 September
Record date Friday, 29 September
Payment date Monday, 2 October
Share certificates may not be dematerialised/rematerialised from Friday, 22
September 2006 to Friday, 29 September 2006, both days inclusive.
On Monday, 2 October 2006, the capital distribution will be electronically
transferred to the bank accounts of certificated shareholders who utilise this
facility. In respect of those who do not, cheques dated 2 October 2006 will be
posted on or around that date. Shareholders who have dematerialised their shares
will have their accounts, held at their CSDP or Broker, credited on Monday, 2
October 2006.
In terms of the Exchange Control Regulations of the Republic of South Africa,
cash payments based on emigrant"s shares controlled in terms of the Exchange
Control Regulations will be forwarded to an Authorised Dealer in foreign
exchange controlling their blocked assets. The elections by emigrants for the
above purpose must be made through the Authorised Dealer in foreign exchange
controlling their blocked assets. Payments due to non-residents are freely
transferable from the Republic.
Preferred ordinary shareholders (unlisted)
Notice is hereby further given that a capital distribution of 267.5 cents per
preferred ordinary share has been declared and is payable to preferred ordinary
shareholders recorded in the registers of the company at the close of business
on Thursday, 28 September 2006.
On Friday, 29 September 2006 the capital distribution will be electronically
transferred to the bank accounts of preferred ordinary shareholders.
On behalf of the board
RA Venter Group company secretary
29 August 2006
Condensed income statement
Restated
2006 2005 %
For the years ended 25 June Rm Rm change
Revenue 54 105 42 605 27
Profit from operations before depreciation
and recoupments 6 090 4 784
Depreciation and recoupments (1 632) (1 390)
Operating profit 4 458 3 394 31
Foreign exchange (losses) gains (138) 7
Fair value gains on foreign exchange derivatives 26 107
Fair value losses on embedded financial
instruments (74)
Profit before net financing costs 4 272 3 508 22
Finance costs including fair value gains
and losses on borrowings and interest swaps (884) (647)
Finance income 102 61
Income from associates and joint ventures 282 186
Profit before exceptional items 3 772 3 108 21
Exceptional items (53) 258
Profit before taxation 3 719 3 366 10
Income tax expense 1 234 989
Profit after taxation 2 485 2 377 5
Attributable to:
Equity holders of Imperial Holdings Limited 2 247 2 184
Minority interest 238 193
Net attributable profit for the year 2 485 2 377 5
Cents Cents
Earnings per share*
- Basic 1 198.1 1 089.8 10
- Diluted 1 125.8 1 022.2 10
Additional information
Headline earnings per share*
- Basic 1 222.1 968.8 26
- Diluted 1 148.3 908.8 26
Earnings per share reconciliation*
Headline earnings per share 1 222.1 968.8
Impairment of property, plant and equipment (4.2)
Profit on sale of property, plant and equipment 5.5 2.6
Exceptional items (25.3) 118.4
Basic earnings per share 1 198.1 1 089.8
*Based on the weighted average number of
shares in issue for the year
Net asset value per share (cents) 5 380 4 244
Number of shares (million)
- in issue 187.6 185.9
- weighted average 187.5 200.4
Financing Rm Rm
Interest paid 914 616
Capitalised to property, plant and equipment (4) (1)
Foreign exchange loss on monetary items 284
Fair value (gains) losses on borrowings
and interest swaps (310) 32
884 647
Finance income (102) (61)
Exceptional items
Impairment of goodwill (43) (67)
(Loss) profit on disposal of investmentssubsidiaries, associates and joint
ventures (10) 344
Loss on closure of business (19)
(53) 258
Accounting policies / Basis of preparation
First-time adoption of International Financial Reporting Standards (IFRS)
This preliminary audited financial information has been prepared in accordance
with IAS 34 - Interim Financial Reporting, and with IFRS 1, First-time Adoption
of IFRS. Imperial"s date of transition to IFRS is 26 June 2004. At this date,
the group prepared its opening balance sheet under IFRS. IFRS has been applied
consistently to all periods presented on a retrospective basis, except for
certain exceptions and exemptions, as prescribed by IFRS1.
Please refer to the reconciliations contained in this report for an analysis of
how the transition to IFRS affected equity, the balance sheet and attributable
profit of the group. Except for minor re-classifications between working capital
movements and leasing assets in line with IFRS balance sheet reclassifications,
Imperial"s cash flow statement is unaffected by IFRS.
These preliminary audited results are a summary of the group"s unqualified
audited financial statements.
Revenue restatement
In line with SAICA Circular 9/2006 (Discounts, rebates and extended payment
terms) the basis for determining revenue in our Car Rental and Tourism division
has been revised. Comparatives have been restated accordingly.
Audit report
The comprehensive results have been audited by the group"s auditors, Deloitte &
Touche. Their signed, unqualified audit opinion is available for inspection at
the company"s registered office.
Condensed balance sheet Restated
2006 2005
Rm Rm
ASSETS
Intangible assets 945 622
Investments in associates and joint ventures 1 602 1 415
Property, plant and equipment 4 231 2 781
Transport fleet 2 570 2 449
Leasing assets 6 443 5 074
Vehicles for hire 896 790
Deferred tax assets 426 339
Other investments and loans 2 208 1 284
Other non-current financial assets 718 412
Inventories 7 535 5 586
Taxation in advance 108 128
Trade and other receivables 8 248 5 752
Cash and cash equivalents 1 630 1 043
Total assets 37 560 27 675
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 1 762 1 929
Shares repurchased and consolidated shares (2 497) (1 760)
Other reserves 1 272 476
Retained earnings 9 465 7 245
Attributable to Imperial Holdings"
shareholders 10 002 7 890
Minority interest 785 466
Total shareholders" equity 10 787 8 356
Liabilities
Equity-settled interest-bearing borrowings 794
Retirement benefit obligations 218 190
Interest-bearing borrowings 6 783 2 629
Liabilities under insurance contracts 1 331 978
Deferred tax liabilities 941 695
Other non-current financial liabilities 127
Provisions for liabilities and other charges 925 707
Trade and other payables 10 620 7 113
Current tax liabilities 1 118 636
Current portion of interest-bearing borrowings 3 916 4 933
Treasury stock buy-back liability 1 438
Total liabilities 26 773 19 319
Total equity and liabilities 37 560 27 675
Supplementary information
Investments in associates and joint ventures
- At carrying value 1 029 870
- Loans 573 545
1 602 1 415
Other investments and loans
- Listed, at market value 1 479 1 121
- Unlisted, at fair value 171 91
- Loans receivable 558 72
2 208 1 284
Capital commitments 1 038 658
Contingent liabilities 810 627
Lease commitments 2 444 1 990
Condensed cash flow statement
Restated
2006 2005
For the years ended 25 June Rm Rm
Cash flows from operating activities
Cash generated by operations before changes
in working capital 5 889 4 906
Net working capital movements (255) (442)
Cash generated by operations 5 634 4 464
Net financing costs (782) (586)
4 852 3 878
Taxation paid (597) (565)
Net cash flows from operating activities 4 255 3 313
Cash flows from investing activities
Net acquisition of subsidiaries and businesses (755) 3
Expansion capital expenditure (2 662) (1 944)
Net replacement capital expenditure (1 104) (935)
Investments, equities and loans (321) (68)
Net cash flows from investing activities (4 842) (2 944)
Cash flows from financing activities
Cash flow from financing activities 3 809 (601)
Purchase of treasury stock (1 539) (70)
Dividends paid (138) (66)
Capital distribution (846) (699)
Net cash flows from financing activities 1 286 (1 436)
Net increase (decrease) in cash and
cash equivalents 699 (1 067)
Reconciling SA GAAP to IFRS
June June
2005 2004
Rm Rm
EQUITY
As previously reported under SA GAAP 9 454 9 077
Adjusted as follows:
IAS 16 - Property, plant and equipment (961) (925)
IAS 17 - Leases (78) (65)
IAS 18 - Revenue (43) (30)
IAS 19 - Employee Benefits (19) (20)
Minority interest in the above 3 4
Stated under IFRS 8 356 8 041
BALANCE SHEET
Assets
As previously reported under SA GAAP 28 898
Adjusted as follows:
Investments in associates and joint ventures (502)
Property, plant and equipment 21
Transport fleet 52
Leasing assets (744)
Deferred taxation 59
Inventories (109)
Stated under IFRS 27 675
Liabilities
As previously reported under SA GAAP 19 444
Adjusted as follows:
Retirement benefit obligations 28
Deferred tax liabilities (190)
Other liabilities 37
Stated under IFRS 19 319
NET ATTRIBUTABLE PROFIT
As previously reported under SA GAAP 2 340
Adjusted as follows:
Operating expenses (79)
Depreciation and recoupments (50)
Income from associates and joint ventures (30)
Exceptional items (3)
Deferred tax assets 5
Minority interest 1
Stated under IFRS 2 184
Condensed statement of changes in equity
Share
For the years ended 25 June Share repurchases/
capital and consolidated
premium shares
For the years ended 25 June
Balance at 26 June 2004 - restated to IFRS 2 637 (947) Net
gains arising on translation of foreign
operations not recognised in the
income statement
Net attributable profit for the year
Net disposal of minority interest
Share of reserves of associates and joint ventures
Contingency reserve created in terms of the Insurance Act
Movement in hedge accounting reserve
Cancellation of 14 532 422 treasury shares (1) 627
Issue of 1 268 400 ordinary shares 60
Purchase of 14 533 096 ordinary shares in
terms of scheme of arrangement (1 438)
Purchase of 911 169 ordinary shares (70)
Movement in share based payment reserve
Capital distribution of 175 cents per ordinary
share in October 2004 (383) 34
Capital distribution of 175 cents per
ordinary share in March 2005 (384) 34
Minority share of dividends
Balance at 25 June 2005 - restated to IFRS 1 929 (1 760)
Prospective adjustment to minority interest
Net gains arising on translation of foreign
operations not recognised in the income statement
Net attributable profit for the year
Net acquisition of minority interest
Contingency reserve created in terms of
the Insurance Act
Release of distributable reserves of associates
and joint ventures to retained earnings
Movement in hedge accounting reserve
Realised gain on the sale of subsidiary
Recognition of share based payments
Issue of 761 500 ordinary shares 39
Issue of 14 516 617 preferred ordinary shares 806 (802)
Purchase of 772 116 ordinary shares (101)
Capital distribution of 220 cents per
ordinary share in October 2005 (456) 43
Capital distribution of 230 cents per
ordinary share in April 2006 (478) 45
Capital distribution of 267.5 cents per
preferred ordinary share in September 2005 (39) 39
Capital distribution of 267.5 cents per
preferred ordinary share in March 2006 (39) 39
Minority share of dividends
Balance at 25 June 2006 1 762 (2 497) 1
Condensed statement of changes in equity (cont.)
Other Retained Minority
For the years ended 25 June reserves earnings interest Total
Balance at 26 June 2004
- restated to IFRS 39 5 866 446 8 041
Net gains arising on translation
of foreign operations not recognised
in the income statement 83 4 87
Net attributable profit for the year 2 184 193 2 377
Net disposal of minority interest (111) (111)
Share of reserves of associates
and joint ventures 150 (150)
Contingency reserve created in
terms of the Insurance Act 29 (29)
Movement in hedge accounting reserve 80 80
Cancellation of 14 532 422 treasury shares (626)
Issue of 1 268 400 ordinary shares 60
Purchase of 14 533 096 ordinary shares in
terms of scheme of arrangement (1 438)
Purchase of 911 169 ordinary shares (70)
Movement in share based payment reserve 95 95
Capital distribution of 175 cents per
ordinary share in October 2004 (349)
Capital distribution of 175 cents per
ordinary share in March 2005 (350)
Minority share of dividends (66) (66)
Balance at 25 June 2005
- restated to IFRS 476 7 245 466 8 356
Prospective adjustment to
minority interest (1) (1)
Net gains arising on translation of foreign
operations not recognised
in the income statement 261 18 279
Net attributable profit for the year 2 247 238 2 485
Net acquisition of minority interest 128 128
Contingency reserve created in terms of
the Insurance Act 57 (57)
Release of distributable reserves
of associates and joint ventures
to retained earnings (34) 34
Movement in hedge accounting reserve 535 74 609
Realised gain on the sale of subsidiary 4 (4)
Recognition of share based payments (27) (27)
Issue of 761 500 ordinary shares 39
Issue of 14 516 617 preferred
ordinary shares 4
Purchase of 772 116 ordinary shares (101)
Capital distribution of 220 cents per
ordinary share in October 2005 (413)
Capital distribution of 230 cents per
ordinary share in April 2006 (433)
Capital distribution of 267.5 cents per
preferred ordinary share in September 2005
Capital distribution of 267.5 cents per
preferred ordinary share in March 2006
Minority share of dividends 138) (138)
Balance at 25 June 2006 1 272 9 465 785 10 787
Segmental information
Detailed segmental information, that forms part of these preliminary audited
results is available on the Imperial Holdings website at
http://www.imperial.co.za.
"Imperial Holdings had an outstanding year during which the group"s 19-year
record of uninterrupted growth since listing was extended with headline earnings
per share growth of 29%"
Non-executive directors
L Boyd (chairman), PL Erasmus, P Langeni, MJ Leeming, JR McAlpine, VJ Mokoena,
PS Molefe, MV Moosa, CE Scott, M Sisulu, RJA Sparks, A Tugendhaft, Y Waja
Executive directors
WG Lynch (Irish), RJ Boettger, HR Brody, MP de Canha, RL Hiemstra, WS Hill, AH
Mahomed, GW Riemann (German)
Company secretary
RA Venter
Business address and registered office
Imperial Place, Jeppe Quondam, 79 Boeing Road East, Bedfordview, 2007
Share transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001
Sponsor
Merrill Lynch SA (Pty) Ltd, 138 West Street, Sandown, Sandton, 2196
The results announcement is available for viewing on the Imperial Holdings
website:
http://www.imperial.co.za and on SENS
Date: 30/08/2006 07:00:31 AM Produced by the JSE SENS Department
