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CMH
CMH
CMH - Unaudited Interim Report: Six Months Ended 31 August 2006
Combined Motor Holdings Limited
(Registration number 1965/000270/06)
(Share code: CMH & ISIN: ZAE000001541)
("the Company" or "the Group")
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2006
45% INCREASE IN PROFIT FOR THE PERIOD
40% INCREASE IN HEADLINE EARNINGS PER SHARE
39% INCREASE IN RECOMMENDED DIVIDEND
Group financial highlights
6 months 6 months 12 months
31 August 31 August Change 28 February
2006 2005 % 2006
Revenue (R"000) 4 386 891 2 775 015 58 6 756 951
Profit from
operations (R"000) 133 249 85 200 56 252 711
Weighted
average
number of
shares in
issue ("000) 21 142 20 840 1 21 011
Number of
shares for
dilution
calculation ("000) 21 883 21 534 2 21 869
Earnings per
share (cents) 383,0 272,4 41 786,1
Diluted
earnings per
share (cents) 370,0 263,6 40 755,2
Headline
earnings per
share (cents) 380,4 272,4 40 775,6
Diluted
headline
earnings per
share (cents) 367,5 263,6 39 745,1
Recommended
dividend per
share (cents) 53,0 38,0 39 183,0
Total assets (R"000) 1 768 457 1 145 433 54 1 766 828
Abridged group income statement
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
31 August 31 August 28 February
2006 2005 Change 2006
R"000 R"000 % R"000
Revenue 4 386 891 2 775 015 58 6 756 951
Cost of sales (3 829 031) (2 440 252) 57 (5 728 309)
Gross profit 557 860 334 763 67 1 028 642
Selling and
administration
expenses (424 611) (249 563) 70 (775 931)
Profit from
operations 133 249 85 200 56 252 711
Finance costs (10 945) 500 (2 289) (12 731)
Profit before
taxation 122 304 85 700 43 239 980
Taxation (39 749) (28 711) 38 (73 870)
Profit for the
period 82 555 56 989 45 166 110
Attributable to:
Equity shareholders
of the company 80 965 56 774 43 165 157
Minority interests 1 590 215 640 953
82 555 56 989 45 166 110
Reconciliation of
headline earnings
Net profit
attributable
to equity holders 80 965 56 774 165 157
Non-trading items
- capital profit on
sale of business (600) - (2 565)
Less: capital gains
tax 55 363
(545) (2 202)
Headline earnings 80 420 56 774 42 162 955
Abridged group balance sheet
Unaudited Unaudited Audited
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
assets
Non-current assets
Plant and equipment 66 930 29 911 57 621
Goodwill 153 174 35 950 153 174
Investment in associate companies 1 082 - 1 082
Deferred taxation 22 851 20 677 27 614
244 037 86 538 239 491
Current assets 1 524 420 1 058 895 1 527 337
Total assets 1 768 457 1 145 433 1 766 828
Equity and liabilities
Capital and reserves
Share capital and reserves 515 356 369 379 477 141
Minority interest 2 879 1 129 1 289
Total equity 518 235 370 508 478 430
Non-current liabilities
Advance from minority shareholders 5 668 625 4 668
Life assurance funds 31 134 23 339 32 639
Lease liabilities 54 167 35 068 44 099
90 969 59 032 81 406
Current liabilities 1 159 253 715 893 1 206 992
Total equity and liabilities 1 768 457 1 145 433 1 766 828
Net asset value per share (cents) 2 447 1 758 2 267
Abridged group cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
Cash flow from operating
activities (17 929) (52 473) 116 109
Cash flow from investing
activities (17 309) (9 885) (263 391)
Cash flow from financing
activities 1 720 - (1 675)
Net cash flow for period (33 518) (62 358) (148 957)
Cash and cash equivalents
at beginning of period 133 934 282 891 282 891
Cash and cash equivalents
at end of period 100 416 220 533 133 934
Group statement of changes in equity
Non- Share-based
Share distributable payment Retained
capital reserve reserve earnings
R"000 R"000 R"000 R"000
At 28 February 2005 12 394 5 896 682 327 879
Net profit for period 56 774
Dividend paid (30 567)
Share-based payment
reserve 819
At 31 August 2005 12 394 5 896 1 501 354 086
Issue of shares 2 081
Net profit for period 108 383
Dividend paid (8 019)
Share-based payment
reserve 819
Purchase of
minority interest
Sale of interest
to minority
shareholder
At 28 February 2006 14 475 5 896 2 320 454 450
Issue of shares 720
Net profit for period 80 965
Dividend paid (44 480)
Share-based payment
reserve 1 010
At 31 August 2006 15 195 5 896 3 330 490 935
Attributable
to equity
holders of Minority Total
the Company interest equity
R"000 R"000 R"000
At 28 February 2005 346 851 286 347 137
Net profit for period 56 774 215 56 989
Dividend paid (30 567) (30 567)
Share-based payment reserve 819 819
At 31 August 2005 373 877 501 374 378
Issue of shares 2 081 2 081
Net profit for period 108 383 738 109 121
Dividend paid (8 019) (20) (8 039)
Share-based payment reserve 819 819
Purchase of
minority interest (365) (365)
Sale of interest
to minority shareholder 435 435
At 28 February 2006 477 141 1 289 478 430
Issue of shares 720 720
Net profit for period 80 965 1 590 82 555
Dividend paid (44 480) (44 480)
Share-based payment reserve 1 010 1 010
At 31 August 2006 515 356 2 879 518 235
SEGMENT ANALYSIS
TOTAL RETAIL MOTOR CAR HIRE
2006 2005 2006 2005 2006 2005
R"000 R"000 R"000 R"000 R"000 R"000
Revenue 4 386 891 2 775 015 4 092 753 2 677 801 87 820 74 938
Profit
from operations 133 249 85 200 124 334 76 904 5 553 8 520
Finance costs (10 945) 500 (27 476) (8 808) (40) (625)
Profit
before taxation 122 304 85 700 96 858 68 096 5 513 7 895
Total assets 1 768 457 1 145 433 1 243 236 716 211 312 250 241 460
Total
liabilities 1 250 222 774 925 829 718 522 633 294 760 207 021
Total employees 2 800 1 948 2 383 1 699 228 193
CORPORATE
MARINE AND LEISURE FINANCIAL SERVICES SERVICES/OTHER
2006 2005 2006 2005 2006 2005
R"000 R"000 R"000 R"000 R"000 R"000
Revenue 173 621 - 14 941 11 298 17 756 10 978
Profit
from operations 4 805 - 8 228 5 697 (9 671) (5 921)
Finance costs (1 019) - 1 080 709 16 510 9 224
Profit
before taxation 3 786 - 9 308 6 406 6 839 3 303
Total assets 156 260 - 39 528 33 916 17 183 153 846
Total
liabilities 49 836 - 34 890 24 534 41 018 20 737
Total employees 123 - 3 3 63 53
COMMENTS ON RESULTS
1. The six months ended 31 August 2006 represented a period of buoyant economic
conditions and increased prosperity for the country. These conditions
promoted the continuation of strong demand for motor vehicles, after a
record-breaking 2005.
2. Given the ever-increasing base off which current results are measured, the
Directors are proud that the Group has maintained its earnings growth
record. The 41% increase in earnings per share has enabled the
recommendation of a dividend of 53 (2005: 38) cents per share. The Group
balance sheet remains strong, with no long-term liabilities and cash
reserves of R100 million.
3. The retail motor segment benefited from the strong economy and recorded a
pleasing 42% growth. The businesses acquired last year have been bedded down
and are producing sound results.
4. Whilst the car hire division has experienced volume growth, intense
competition has led to a decline in hire rates and operating margins. As the
car hire industry"s rates are sensitive to the cost of finance, the recent
and further anticipated interest rates hikes will maintain the pressure.
Peak season volumes during the next six months are expected to increase
earnings to a level in line with last year.
5. The marine and leisure division was acquired in October 2005 and its
business is of a cyclical nature. The period under review contains the
winter months of April to August when trading levels are low. The second
half results are predicted to reflect considerable increase, in line with
the corresponding period last year.
6. A sound and consistent earnings growth was achieved by the financial
services segment.
PROSPECTS
1. It is expected that economic trading conditions during the second half of
the financial year will not be as favourable as those during the period
under review.
2. The Group has a track record of successful trading during tougher conditions
and the Directors are confident that a satisfactory level of earnings growth
will be achieved and that the full year results will be in line with
shareholders" expectations.
BASIS OF PREPARATION
The results have been prepared in accordance with IAS 34: Interim Financial
Reporting, the Listing Requirements of the JSE Limited and Schedule 4 of the
Companies Act of South Africa. The accounting policies of the Group, which
comply with International Financial Reporting Standards (IFRS) have been
consistently applied to these results and are the same as those applied to the
results at 28 February 2006.
DIVIDEND
An interim dividend (dividend number 39) of 53,0 cents will be paid on Monday,
18 December 2006 to members reflected in the share register of the Company at
the close of business on the record date Friday, 15 December 2006. Last day to
trade "cum" dividend is Friday, 8 December 2006. First day to trade "ex"
dividend is Monday, 11 December 2006. Share certificates may not be
dematerialised or rematerialised from Monday, 11 December 2006 to Friday, 15
December 2006, both days inclusive.
BLACK ECONOMIC EMPOWERMENT
CMH supports the Government"s BEE initiatives and over the years has been
successful in introducing black shareholders into selected operating companies.
The Group has exceeded its training and development targets and has timeously
submitted all reports required in terms of the relevant Acts.
The Group is at an advanced stage of negotiation to introduce a BEE equity
partner at Group level. Details of the scheme and the financial effects thereof
will be communicated to shareholders early in November 2006.
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 results have not been audited or reviewed by the Group"s external auditors.
Press announcement
Combined Motor Holdings Limited
Results released by Combined Motor Holdings today reflected a 40% increase in
headline earnings per share for the six months ended 31 August 2006.
Speaking from the Group"s head office in Durban, CEO Jebb McIntosh said that
the period enjoyed buoyant economic conditions and increased prosperity for the
country. The conditions promoted the continuation of strong demand for motor
vehicles, after a record-breaking 2005.
Given the increasing base off which current results are measured, McIntosh said
he was proud that the Group has maintained its earnings growth record.
The Group recommended a dividend payment of 53 cents per share, up 39% on the
corresponding period.
McIntosh reported that despite the record growth which the industry has
experienced over the past few years, conditions at retail level were highly
competitive. Along with the growth in sales has come an increase in the range
of product available and an expanding national dealer network.
"I expect that economic trading conditions during the second half of the year
will not be as favourable as those during the period under review. However, the
Group has a track record of successful trading during tougher conditions and I
am confident that a satisfactory level of earnings growth will be achieved".
McIntosh advised that the Group had reached an advanced stage of negotiation to
introduce a BEE equity partner at Group level.
"This is something which we have been working on for a long time and we hope to
communicate the details of the scheme and the financial effects thereof to
shareholders during early November 2006".
DIRECTOR
Mr Alec Rogoff passed away during July 2006 after serving 12 years as a
non-executive director. His support and wise counsel will be sorely missed.
By order of the Board of Directors
SK Jackson BCom (Hons) (Tax Law), CA(SA)
Secretary
10 October 2006
REGISTERED OFFICE
1 Wilton Crescent
Umhlanga Ridge
4319
TRANSFER SECRETARIES
Computershare Investor Services 2004
(Proprietary) Limited
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
Date: 11/10/2006 04:30:35 PM Produced by the JSE SENS Department
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