Wrap Text
IPL/IPLP - Imperial Holdings Limited - Audited Preliminary results for the year
ended 30 June 2011
Imperial Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1946/021048/06
JSE share code: IPL ISIN: ZAE000067211
Preference share code: IPLP ISIN: ZAE000088076
("Imperial", the "company" or the "group")
Imperial Holdings Limited
Audited Preliminary results for the year ended 30 June 2011
- HEPS up 38% to 1 370 cps
- Operating profit up 38% to R4 526 million
- Revenue 21% higher to R64 667 million
- Cash flow from operating activities up 86%
- Net debt/equity ratio of 34%
- Full year dividend of 480 cps
Overview of results
The group achieved an outstanding result amidst tough trading conditions in
certain of our markets. Revenue was up 21% and operating profit increased by 38%
to R 4,5 billion. The return on equity of the group reached 23% whilst cash
generated by operations increased by 49%.
The group`s new vehicle unit sales in South Africa grew by 21% which was
slightly ahead of the industry. Trading conditions in our SA Logistics Division
were challenging, while the International Logistics Division performed well in a
strong German economy. Acquisitions made a positive contribution and were
earnings enhancing.
The operating margin increased to 7,0% from 6,2% with the main contributor being
the Distributorships division which achieved a margin of 8,4% against 5,4% in
the prior year. Revenue in the Distributorships division increased by 30,0%.
Automotive Retail grew its margin to a strong 2,9% from 2,2%, with revenue up
10%. The margin in our combined Southern African and European logistics business
declined to 5,5%, mainly due to the inclusion of the newly acquired CIC Holdings
Limited ("CIC"), the negative impact of the transport workers strike in February
and operational difficulties experienced in The Cold Chain (which is an
important unit in the Consumer Logistics Division). The Car Rental and Tourism
division`s margin declined due to the benefits from the 2010 FIFA World Cup
which boosted the performance in the prior year, pressure on rental rates, a
sluggish used car market, losses in the newly acquired Panel businesses and
declines in the Tourism and Coach businesses.
The acquisition of Midas, which only contributed for seven months in the
previous year, and CIC, which was acquired in the first half of this financial
year, contributed strongly to the results of the Distributorships and SA
Logistics Division respectively.
In line with a more unified management approach across the spectrum of financial
products in the group, we now report all financial services as a single segment.
This includes the Regent Insurance group, LiquidCapital and a number of other
financial services operations which mainly originate business from our motor
vehicle operations. This division contributed strongly with operating profit up
by 9% to R760 million. The underwriting margin improved significantly largely
due to a better claims experience, while insurance investment income fell short
of the strong performance in the corresponding period due to lower interest
rates. The equity portfolio remains conservatively managed with downside
protections in place. Operating profit from other financial services grew
strongly from the combination of annuity income from service and maintenance
plans, vehicle financing alliances and a growing range of value added products.
In aggregate, the group`s operating profit grew by 38%, and Headline Earnings
per Share (HEPS) increased by 38%. Below the operating line, the most
significant variation from the corresponding previous period which impacted on
HEPS was the fair value adjustment from the Lereko BEE structure of R279 million
(147 cps) compared to R78 million (42 cps) in the prior period. Last year, the
net impact to headline earnings from once off items including the fair value
gain on the Lereko BEE structure was R54 million (29 cps). Imperial Bank
contributed R175 million (94 cps) in the prior period which did not recur as a
result of the sale of our shareholding in the bank. Amortisation of intangible
assets arising on business combinations amounting to R15 million (8 cps)
impacted negatively in the current period.
The interest charge reduced by 7,2% to R554 million due to lower interest rates
and lower debt. The increase in the minorities` share of profit is largely
attributable to the strong performance of the Distributorships division and new
acquisitions where a number of minority shareholders participate. Interest
covered by operating profit has increased from 5,5 times to 8,2 times.
The results of discontinued operations are not disclosed separately as they are
no longer material to the group`s results and contributed R7 million of
attributable profit for the year.
The effective tax rate at 31% was above the statutory rate of 28% because of the
cost of secondary tax on companies, non-deductible expenses and deferred tax
impairments, which were offset by the revaluation of the Lereko call option.
The significant decrease in income from associates relates mainly to the sale of
our shareholding in Imperial Bank. Imperial Bank contributed R175 million in the
prior period. Mix Telematics, in which we hold a 25,6% interest, contributed R17
million and the contribution from smaller associates increased from the prior
year. Renault had a solid year but its profits will only be recognised once
previous losses have been recouped.
Financial position
Intangible assets increased by 81% to R1,8 billion mainly due to the CIC
acquisition.
Investment in associates and joint ventures reduced as the call option in Lereko
has been reclassified to equity.
Net working capital was well managed and increased by R363 million after the
acquisition of CIC and on revenue growth of
R11,2 billion. The net working capital turn improved from
19,2 to 21,1 times.
Shareholders` equity was impacted by the repurchase of approximately 1,5 million
shares worth R156 million and the elimination of Imperial shares owned by
Lereko, which are now treated as treasury stock decreasing equity by R665
million.
The group raised R2 billion by the issue of a fixed rate seven year corporate
bond for R1,5 billion (IPL6) and a five year floating rate bond for R500 million
(IPL5) in September 2010 at spreads of approximately 200 bps over the
appropriate risk free rates. The issues provided long-term liquidity and were
used to settle IPL3 and IC01 of R2 billion which matured. The group`s liquidity
position is strong with R8 billion in unutilised facilities and only 16% of debt
is due within one year. 41% of the group`s debt is at a fixed interest rate.
Net debt to equity (excluding preference shares) at 30% was lower than the 39%
at June 2010 and 48% at December 2010. The current gearing level is below our
target range of 60% to 80%, which leaves significant room for expansion of the
group.
Cash flow
Cash generated by operations was 49% higher than the prior year. After financing
costs and tax payments, net cash flow from operating activities increased by
86%. Net working capital cash flows increased by only R298 million, despite
strong turnover growth of R11,2 billion. Capital expenditure on rental assets
was significantly lower than in the corresponding period as we de-fleeted a
large number of car rental vehicles in the second half of this financial year.
Net expansion and replacement capital expenditure excluding car rental vehicles
was higher than in the prior period as economic circumstances and trading
conditions warranted renewed expansion. The free cash flow to headline earnings
ratio was 132%.
The final instalment on the sale of Imperial Bank of R477 million was received
during the period and R943 million was spent on the acquisition of subsidiaries
and businesses of which CIC formed the major part.
Business conditions in our markets
Trading conditions in the automotive retail market rebounded strongly in 2010.
The recovery has continued into the 2011 calendar year, albeit at a slower rate
as the prior year base increased. Demand is being stimulated by historic low
interest rates, low vehicle inflation, increase in the number of entry level
models, increased appetite by banks for vehicle finance and pent-up demand as
motorists extended their vehicle replacement cycles during the economic crisis.
The commercial vehicle market, which lags the upturn in passenger vehicle sales,
has also reversed its negative trend. However, the used car market is depressed,
partly because of stronger new car sales.
Volumes in the consumer logistics market, which represents approximately 42% of
the revenue of SA Logistics were sluggish in the second half. Construction
related volumes were still weak, although volumes in bulk food, chemicals and
fuel were positive. The transport workers strike in February was disruptive.
The German economy, where Imperial Logistics International derives most of its
income, continued to show good growth in the second half. A relatively weak Euro
and strong demand for German manufactured goods, particularly in the steel and
automotive sectors where the bulk of our customer base operates, contributed to
this.
Low demand in the international and local leisure travel sector, the sluggish
used car market and low rental rates across the car rental Industry affected our
Car Rental and Tourism Division adversely.
The recovery in vehicle sales has been beneficial to our newly created Financial
Services Division which creates a valuable annuity stream to support future
earnings. Insurance underwriting conditions were favourable in the second half,
particularly in the short-term industry. Investment markets were less favourable
with lower interest and softer equity markets.
Vehicle sales
In South Africa, the group sold 96 453 new (including 11 477 new vehicles sold
to outside dealers) and 54 746 used vehicles in the financial year, respectively
21% and 4% more than the prior period. The national new vehicle market grew by
20% year on year.
The Australian and United Kingdom operations sold 9 140 new vehicles, which was
11% higher than the prior period and 3 841 used vehicles, which was 9% higher.
Expansion of the group during the year
Acquisitions during the period consisted of:
- 100% of CIC, a distributor of fast moving consumer goods throughout Namibia,
Botswana, Swaziland, Mozambique and South Africa;
- 80% of EWC Express , which trades in the parcel and express delivery sector of
the logistics market;
- 50,1% of Commerce Edge SA, a procurement training company;
- 100% of Danmar Autobody, a manufacturer approved panelbeater and vehicle
repair facility in the Johannesburg area;
- 100% of E-Z-GO South Africa, a distributor of the leading brand of golf carts
for the golfing and commercial markets;
- 60% of Graffitti Designs, a leading vehicle branding and digital print
company;
- 60% of 777 Logistics, a fuel and chemicals bulk tanker business;
- 74,9% of Edusport, a leading sports, educational and incentives group tour
operator, with particular strength in the management of large events, and
- 75% of Turbo Exchange, a distributor and refurbisher of turbo chargers.
In the aggregate, acquisitions finalised over the past two years, assuming they
were included for a full 12-month period, would have added approximately R7
billion of annual turnover to the group.
Divisional reports
Logistics
Southern African Logistics
H2 H2
R million 2011 2010 Change % 2011 2010
Revenue 13 788 10 308 33,8 7 286 5 194
Operating profit 786 763 3,0 350 396
Operating margin 5,7% 7,4% 4,8% 7,6%
Southern African Logistics (continued)
Change % Change %
on H2 H1 on H1
R million 2010 2011 2010
Revenue 40,3 6 502 12,1
Operating profit (11,6) 436 (19,7)
Operating margin 6,7%
The division faced a challenging trading environment in the current year,
particularly in the second half when consumer volumes decreased in certain
instances and a strike in February had a material impact on profitability across
all business units. The Cold Chain, which is an important unit in our Consumer
Products division, experienced operational problems which followed a
restructuring of the business and recorded lower throughput in the second half,
resulting in losses. These adverse factors were to some extent offset by the
acquisition of CIC, effective from 1 November 2010, as well as significant
contract gains.
The operating margin was lower than the prior period mainly due to the strike in
February, losses at The Cold Chain and the inclusion of CIC`s results for eight
months. Due to the nature of its operations, CIC operates at lower margins than
our current mix of businesses but is able to generate good returns.
Our Transport and Warehousing business, which mainly services the manufacturing,
mining, commodities and construction industries, performed satisfactorily,
despite inconsistent volume growth. New contract gains and good activity in the
tipper business made a positive contribution to results whilst construction
related volumes were weak.
The Specialised Freight business produced good results as volumes grew in the
food and chemicals businesses and volumes were gained in the liquid petroleum
gas markets. New contract gains and the acquisition of 60% of 777 Logistics also
contributed to the positive performance.
The Consumer Logistics business was affected by a sluggish consumer market in
the second half as well as the disappointing performance of The Cold Chain.
Manufacturing volumes in our customer base were also depressed. The division`s
performance was however enhanced by contract gains and the acquisition of 80% of
EWC Express, which trades in the parcel and express delivery sector of the
logistics market.
Integration Services produced satisfactory results with Volition and Imperial
Air Cargo performing well. Pragma, a 34,4% associate also increased its
contribution from the prior year. The division continues to make a valuable
contribution to the intellectual capital of the group, specifically by assisting
other divisions to expand and integrate client solutions.
Imperial Logistics Africa was established in the period by combining the
businesses that operate mainly on the continent outside South Africa into one
management and strategic structure to focus on expanding our footprint in the
region. The division performed in line with expectations, although the strong
rand impacted on revenue streams. The acquisition of 100% of CIC made a
significant contribution to this division and significantly increased the scope
of our operations on the continent. The expansion of our Africa operations
remains a strong strategic imperative for the division.
Gross capital expenditure of R919 million was incurred. The net investment in
the fleet is slightly higher than the prior year.
International Logistics
H2 H2
EUR million 2011 2010 Change % 2011 2010
Revenue 716 604 18,5 377 312
Operating profit 38 30 26,7 22 18
Operating margin 5,3% 5,0% 5,9% 5,8%
International
Logistics
H2 H2
R million 2011 2010 Change % 2011 2010
Revenue 6 848 6 378 7,4 3 639 3 126
Operating profit 350 298 17,4 194 167
Operating margin 5,1% 4,7% 5,3% 5,3%
International Logistics (continued)
Change % Change %
on H2 H1 on H1
EUR million 2009 2011 2011
Revenue 20,8 339 11,2
Operating profit 22,2 16 37,5
Operating margin 4,7%
International Logistics
Change % Change %
on H2 H1 on H1
R million 2009 2011 2011
Revenue 16,4 3 209 13,4
Operating profit 16,2 156 24,4
Operating margin 4,9%
Imperial Logistics International achieved an outstanding result on the back of a
strong German economy. Revenue growth was experienced across all major business
units. New contracts were gained and near record volume growth contributed to
the increase in revenue despite lack luster freight rates.
Imperial Reederei, our inland waterway shipping business, benefited from good
transport volumes, especially in dry bulk goods. Two major steel furnaces for
which we perform shipping services operated at full capacity whilst one was
undergoing maintenance in the prior period.
Panopa, which provides parts distribution and in-plant logistics services to
automotive and steel manufacturers, performed well. Gillhuber`s new business
gains and a major turnaround in the automotive and steel industries in Germany
contributed positively. The parts logistics business is also performing well and
the recently commissioned parts distribution warehouse in Herten is operating at
full capacity with expansion plans underway.
The port operator, Neska, performed well due to increased volumes at container,
bulk and paper terminals. The good performance was achieved despite the
additional start up costs and weak demand at the Krefeld Container Terminal.
Due to much improved economic conditions and a more positive outlook, capital
expenditure for the period was higher when compared to the prior period.
Car Rental and Tourism
H2 H2
R million 2011 2010 Change % 2011 2010
Revenue 3 313 2 941 12,6 1 646 1 497
Operating profit 351 382 (8,1) 153 213
Operating margin 10,6% 13,0% 9,3% 14,2%
Car Rental and Tourism (continued)
Change % Change %
on H2 H1 on H1
R million 2010 2011 2011
Revenue 10,0 1 667 (1,3)
Operating profit (28,2) 198 (22,7)
Operating margin 11,9%
The above table excludes contributions from the sale of financial services
products that are of an annuity nature, i.e. results derived from JV alliances
with financial institutions are excluded. These results are now reported under
the newly created Financial Services Division. Comparatives have been re-
presented.
The division had to contend with extremely difficult trading conditions during
the period. The prior year`s results were boosted by the 2010 FIFA World Cup.
Turnover growth was recorded in the car rental business with revenue days up by
11%. Utilisation was good at 72% but revenue per day decreased by 2%. Both
volumes and rates of international and leisure business were lower than the
prior year.
The average rental fleet size was 10% up from last year, mainly due to higher
rental days and the delayed de-fleeting of vehicles in the middle of the year.
Retail unit sales at Auto Pedigree were lower in a difficult used car market
with operating margins also depressed. While the car rental fleet size has now
been normalised, we are actively managing our stock position at Auto Pedigree.
Danmar Autobody was acquired on 1 October 2010 to provide scale and broaden the
footprint in Gauteng for our panelshop business. While the acquisition has taken
longer to bed down than anticipated, the panelshop business should start making
a more meaningful contribution in the future.
The global recession continues to affect our touring operations as international
inbound volumes remain under pressure. Tourism revenue and operating profit in
the prior year were also boosted by the 2010 FIFA World Cup.
Distributorships
H2 H2
R million 2011 2010 Change % 2011 2010
Revenue 21 947 16 892 29.9 10 904 9 489
Operating profit 1 844 914 101,8 1 028 631
Operating margin 8,4% 5,4% 9,4% 6,6%
Distributorships (continued)
Change % Change %
on H2 H1 on H1
R million 2010 2011 2011
Revenue 14,9 11 043 (1,3)
Operating profit 62,9 816 26,0
Operating margin 7,4%
The above table excludes contributions from the sale of financial services
products that are of an annuity nature, i.e. results derived from sale of
maintenance products, JV alliances with financial institutions and other
financial related products are excluded. These results are now reported under
the newly created Financial Services Division. Comparatives have been re-
presented.
Excluding our Australian operation, new vehicle registrations as reported to
NAAMSA by Associated Motor Holdings (AMH) and Amalgamated Automobile
Distributors (AAD) were 24% higher, compared to a market increase of 20%. The
successful launch of new models, increased sales to car rental companies and the
improvement in the new vehicle market over the past 12 months all contributed to
growth in revenue and operating profit. Our imported brands have also
strengthened their market positions significantly. The strongly growing vehicle
parc of our imported brands, particularly Hyundai and Kia, bodes well for the
after-market activities in future.
Margins improved due to the growth in sales volumes, an increased dealer network
and throughput, effective cost control and a stable currency. Annuity revenue
streams from after-sales parts and service business are also becoming a much
more significant contributor to results.
The performance of LiquidCapital, the financial services arm of AMH, is now
reported in our new Financial Services Division in order to better reflect the
nature of our businesses.
In Australia, new retail unit sales increased by 4% while used vehicle sales
were 14% up. The business remains profitable despite disruptions to sales caused
by upgrading facilities and the lack of new products.
Renault continues to perform well and has recorded a marked improvement in sales
volumes after new product launches. Prior year losses are however still being
recouped and therefore Renault`s positive results did not contribute to the
division.
In the Auto Parts Division, Midas contributed for the full 12-month period
against seven months in the prior year. Midas continues to perform well and has
positioned Imperial as the leader in this segment, while creating a base to
enter adjacent parts and component markets. The engine parts businesses
performed satisfactorily. The recent acquisition of 75% of Turbo Exchange was a
valuable addition to the division.
The Goscor Group performed very well, trading ahead of expectations. Crown and
Doosan increased their market share whilst maintaining a strong order book. The
cleaning equipment associate performed well. Graffiti, acquired early in the
year, produced solid results, driven by new contracts, the 2010 FIFA World Cup
and increased capacity.
During the year, E-Z-GO South Africa, a distributor of the leading brand of golf
carts was acquired. E-Z-GO also provides fleet management solutions, after-sales
service and spare parts for its product range. The need for its products by
industrial users, especially in the healthcare and hospitality industries,
offers good growth potential. The business is performing in line with
expectations.
Earnings from NAC continued to decline as aircraft sales came under pressure,
both from lower demand and lack of availability of bank funding for this asset
class. However, significant cost savings were achieved in the maintenance
divisions while flight operations and the charter businesses improved. NAC now
offers a more suitable range of products for the general aviation market after
relinquishing the Hawker Beechcraft distributorship and acquiring rights to
Piper and other well-priced products.
Automotive Retail
H2 H2
R million 2011 2010 Change % 2011 2010
Revenue 17 150 15 543 10,3 8 628 7 829
Operating profit 497 345 44,1 280 176
Operating margin 2,9% 2,2% 3,2% 2,2%
Automotive Retail (continued)
Change % Change %
on H2 H1 on H1
R million 2010 2011 2011
Revenue 10,2 8 522 1,2
Operating profit 59,1 217 29,0
Operating margin 2,5%
The above table excludes contributions from the sale of financial services
products that are of an annuity nature, i.e. results derived from JV alliances
with financial institutions are excluded. These results are now reported under
the newly created Financial Services Division. Comparatives have been re-
presented.
The division produced excellent growth in operating profit for the year,
reflecting the benefits of right-sizing operations in prior years and the
buoyant new vehicle market over the past 12 months. The operating margin
improved strongly to 2,9% from 2,2% in the prior year and 2,5% in the first half
of F2011.
New passenger car sales of the division rose 24%, in line with growth in this
segment of the vehicle market. There was a notable shift in the mix to entry-
level vehicles, reflecting continued pressure on consumer debt levels and
disposable income. As a result, the mid-priced and luxury vehicle markets were
less buoyant.
The narrowing gap between new and used vehicle prices affected used vehicle
sales, with volumes flat year on year in a generally sluggish market.
The commercial vehicle market also improved during the period, with an 11% rise
in unit sales across all brands mirroring increased activity, particularly in
the logistics and construction sectors, although the latter is still at a low
level of activity.
Current trends indicate that passenger and light commercial vehicle volumes will
continue to improve for the rest of the calendar year, albeit at a slower growth
rate.
In the UK, the truck dealerships have settled down after rationalisation and
cost reductions in the prior period. The business performed ahead of
expectations despite a market that remained depressed.
Beekman Canopies` performed well, with sales up on last year. Sales volumes at
Jurgens Ci also improved markedly. Initiatives are under way to increase
throughput in this division by joint manufacture and marketing across the group.
Financial Services
H2
R million 2011 2010 Change % 2011
Revenue
Insurance 2 808 2 694 4,2 1 454
Other financial services 601 569 5,6 316
Total 3 409 3 263 4,5 1 770
Operating profit
Insurance
Adjusted investment income, 206 275 (25,1) 63
including fair value adjustments
Adjusted underwriting results 319 218 46,3 212
Total insurance operating profit 525 493 6,5 275
Net underwriting margin 11,4% 8,1% 14,6%
Other financial services 235 203 15,6 163
Operating margin 39,1% 35,7% 51,7%
Total operating profit 760 696 9,2 438
Operating margin 22,3% 21,3% 24,8%
Financial Services continued
Change % Change %
H2 on H2 H1 on H1
R million 2010 2010 2011 2011
Revenue
Insurance 1 345 8,1 1 354 7,4
Other financial services 299 5,7 285 10,9
Total 1 644 7,7 1 639 8,0
Operating profit
Insurance
Adjusted investment income, 110 (42,7) 143 (55,9)
including fair value
adjustments
Adjusted underwriting results 122 73,8 107 98,1
Total insurance operating 232 18,5 250 10,0
profit
Net underwriting margin 9,1% 7,9%
Other financial services 119 36,9 72 127,3
Operating margin 39,9% 25,2%
Total operating profit 351 24,8 322 36,0
Operating margin 21,4% 19,6%
Due to the more unified approach across the group in the management of financial
services and the focused marketing of these products, it has been decided to
create a separate Financial Services division which includes the Regent Life and
Short-term Insurance businesses and LiquidCapital that offers a broad range of
financial services and products to the motor trade and motoring public.
Financial Services products are sold through all our motor businesses, including
Auto Pedigree. It is a growing part within our motor related activities and a
focus area across the group. LiquidCapital is the major contributor to the Other
Financial Services segment with a strong emphasis on value added products
including vehicle maintenance, roadside assistance and insurance sales through a
number of different channels. This division also includes our associate Mix
Telematix, a JSE listed company involved in stolen vehicle recovery, vehicle
tracking and fleet management. Vehicle financing joint ventures with financial
institutions and cell captives which our motor retail and distribution
businesses have in partnership with Regent are also included in this segment.
The individual life business made a solid contribution to results, with gross
premium income up 16% for the year. In the short-term insurance business, gross
written premiums collected were flat year on year, reflecting the termination of
poor quality business.
The adjusted underwriting result was strongly up by 46% from R218 million to
R319 million. The primary driver behind the underwriting result was an improved
claims experience and operational cost management in the short-term business.
Investment returns were lower year on year, reflecting the low interest rate
environment. Regent`s exposure to the equity markets remained low, with built-in
downside protection.
LiquidCapital has benefited from its exposure to the motor industry, which has
shown strong growth especially in the entry level segment of the market where
our Distributorships Division is well positioned. The growth in the number of
new maintenance plans written on the back of the strong new vehicle market
provides a valuable annuity earnings underpin to our future profits.
Skills development and corporate social investment
In the 2011 year Imperial spent R116 million on skills development and training.
We currently have over 5 000 learnerships throughout the group of which 450
trainees are enrolled at the group`s Cape Town and Germiston based Technical
Training Academies in order to become skilled artisans. In addition the group
identified 1 250 employees for basic skills empowerment opportunities in Adult
Basic Education, Computer Basics and training towards obtaining a drivers
license.
To date 120 senior executives participated in a leadership development programme
with a leading business school, which was customised for Imperial`s diversified
and decentralised business model with its need for entrepreneurial and
innovative leaders. The programme is continuing and more leaders in the group
will participate in it.
A future talent pipeline is being nurtured through a graduate development
programme which currently provides 108 university graduates with hands-on
workplace experience and mentorship in respect of the Imperial culture and the
practical skills required in business.
The Imperial and Ukhamba Community Development Trust, continues to promote
effective learning and teaching at seven underprivileged schools serving 7 500
learners in Gauteng.
Ordinary dividend
A final ordinary dividend of 260 cents per share (2010: 200 cents per share) has
been declared. This brings the full dividend for the year to 480 cents per share
(2010: 350 cents per share).
Strategic intentions
The group`s strategy remains to focus on its three core pillars, namely:
- Logistics
- Vehicle Rental and Tourism
- Vehicle Distribution and Retail including ancillary Financial Services.
The group`s strong capital position will support the expansion of our Southern
African logistics business into the African continent and further growth and
diversification of our domestic and international logistics businesses. Our
objective of optimising our vehicle operations will lead to selected
acquisitions and greenfield investments in automotive related fields. In the
Tourism Division, we will focus on seeking further opportunities which match our
skills base and can add value to our existing car rental and coach touring
businesses.
Over the past number of years the group pursued a strategy to add parts,
components and industrial equipment businesses to its portfolio. This includes
Jurgens, Beekmans and the recent acquisitions of Midas, Turbo Exchange, Goscor
and E-Z-GO. In total across the group, inclusive of NAC, such businesses
contributed
R6 billion of turnover and R410 million operating profit. We will continue to
pursue opportunities in these segments due to their asset-light nature and good
returns on capital.
Prospects
The group is well positioned to take advantage of growth opportunities in its
target markets, although trading conditions will continue to be difficult in a
number of our focus areas.
The logistics market continues to grow as customers outsource more of their
activities to logistics specialists and expectations are that the industry will
grow at a multiple of GDP growth. Given Imperial`s infrastructure, network and
representation in diverse sectors, it is ideally positioned to capitalise on the
opportunities presented by the logistics industry. Recent strike action in
industries wherein our customers operate resulted in a continued challenging
environment while consumer logistics volumes were also under some pressure. The
acquisition of CIC provides an ideal platform to take advantage of the growth
opportunities in the rest of Africa, which is a key focus for the group.
Trade volumes remain robust in Germany despite the uncertainty in weaker
European economies. The rate of growth in our International Logistics business
could however start slowing down due to the higher base created by the recent
strong performance. We are positive on the medium-term prospects of our
International Logistics business. It is well positioned in attractive niches in
the logistics industry in Germany and acquisitions could be a further growth
driver.
In a competitive car rental market, we are focused on improving brand awareness
and rental rates, while optimising our fleet size and utilisation rates. We
expect a continuation of very difficult conditions in the industry. Results from
our tourism operations will continue to be affected by global economic
conditions and the strong rand.
The outlook for our new financial year is for a slowing rate of growth in new
vehicle sales as the base is now substantially higher. High consumer debt levels
and possible interest rate hikes present potential headwinds in the new vehicle
market. This will be offset by the strong positioning of our imported brands,
improved product supply and the benefits that flow from parts and service
revenue streams as the car parc of these brands grew strongly over the recent
past. Used vehicle demand is expected to remain depressed as the gap between the
cost of new and used vehicles is very slim.
The Autoparts business is less susceptible to declining new vehicle sales and
should continue to perform solidly as initiatives in expanding its product range
and geographic footprint bear fruit. Our industrial distribution businesses
should continue to perform well. The order book in the lift truck business in
the Goscor Group remains strong and our key brands, Tennant, Crown, E-Z-GO and
Doosan continue to gain market share.
Financial Services earnings should be robust in the year ahead, while the
investment results will be muted due to a low interest rate cycle and uncertain
equity markets. Regent will focus on growing premium income by expanding
distribution channels. LiquidCapital will generate valuable stable annuity
earnings due to the new business that is being placed on its book during the
current strong vehicle sales cycle.
Our financial position remains strong despite significant organic and
acquisitive growth during the period under review. We are therefore well
positioned to take advantage of attractive acquisition opportunities as they
arise.
The global economy finds itself in extremely volatile and uncertain conditions,
which may affect the group. However, management continues to focus on our key
strategies and on further improving the group`s returns on capital. Given
current conditions, we believe that it will be challenging to achieve meaningful
growth in the year ahead.
Non-executive directors
Roy McAlpine retired from the Board on 30 June 2011 after many years as an
independent non-executive director. We thank him for his valuable contributions
while in office and wish him well in this new phase of his life.
Santie Botha was appointed as an independent non-executive director effective 1
September 2011. We believe her business acumen and marketing experience will add
to the depth of skills on our Board, and look forward to her contributions.
By order of the Board
TS Gcabashe HR Brody AH Mahomed
Chairman Chief Executive Financial Director
Declaration of dividends for the year ended 30 June 2011
Preference shareholders and Ordinary shareholders
Notice is hereby given that:
- a preference dividend of 336.575 cents per preference share has been declared
payable, by the Board of Imperial, to holders of non-redeemable, non-
participating preference shares; and
- an ordinary dividend in an amount of 260 cents per ordinary share has been
declared payable, by the Board of Imperial, to holders of ordinary shares.
The company has determined the following salient dates for the payment of the
preference dividend and ordinary dividend:
2011
Last day for preference shares and ordinary
shares respectively to trade
cum-preference dividend and cum ordinary Friday, 16 September
dividend
Preference and ordinary shares commence
trading ex preference dividend
and ex ordinary dividend respectively Monday, 19 September
Record date Friday, 23 September
Payment date Monday, 26 September
Share certificates may not be dematerialised/rematerialised between Monday, 19
September 2011 and Friday, 23 September 2011, both days inclusive.
On Monday, 26 September 2011, amounts due in respect of the preference dividend
and the ordinary dividend will be electronically transferred to the bank
accounts of certificated shareholders that utilise this facility. In respect of
those who do not, cheques dated 26 September 2011 will be posted on or about
that date. Shareholders who have dematerialised their shares will have their
accounts, held at their CSDP or broker, credited on Monday, 26 September 2011.
On behalf of the Board
RA Venter
Group Company Secretary
24 August 2011
Condensed consolidated income statement
Re-presented
Audited Audited
2011 2010 %
for the year ended 30 June Rm Rm change
Revenue 64 667 53 438 21
Net operating expenses (58 646) (48 771)
Profit from operations before 6 021 4 667
depreciation and recoupments
Depreciation, amortisation, (1 495) (1 379)
impairments and recoupments
Operating profit 4 526 3 288 38
Recoupments from sale of 7 51
properties, net of impairments
Amortisation of intangible assets (15)
arising on business combinations
Foreign exchange (losses) gains (33) 49
Fair value losses on foreign (18) (38)
exchange derivatives
Impairment reversals of share 24
scheme loans
Gain on early settlement of 27
European bond
Fair value gain on Lereko call 279 78
option
Exceptional items (46) 58
Profit before net financing costs 4 700 3 537 33
Net finance cost including fair (554) (597)
value gains and losses
Income from associates and joint 34 174
ventures
Profit before taxation 4 180 3 114
Income tax expense (1 272) (911)
Profit from continuing operations 2 908 2 203 32
Discontinued operations 59
- Trading profit from operations 29
- Fair value profit on 30
discontinuation
Net profit for the year 2 908 2 262
Net profit attributable to:
Equity holders of Imperial 2 562 2 021
Holdings Limited
Non-controlling interests 346 241
2 908 2 262
Condensed statement of other comprehensive income
Re-presented
Audited Audited
2011 2010
for the year ended 30 June Rm Rm
Net profit for the year 2 908 2 262
Exchange gains (losses) arising on 26 (184)
translation of foreign operations
Fair value gain on Lereko call option 244
Movement in hedge accounting reserves 39 22
Fair value gains on available for sale 15
financial assets
Share of other comprehensive income of (4) (37)
associates and joint ventures
Income tax relating to components of other 1
comprehensive income
Total comprehensive income for the year 2 969 2 323
Total comprehensive income attributable to:
Equity holders of Imperial Holdings Limited 2 618 2 085
Non-controlling interests 351 238
2 969 2 323
Earnings per share information
Re-presented
Audited Audited
2011 2010 %
for the year ended 30 June Rm Rm change
Headline earnings reconciliation
Attributable profit 2 562 2 021
Attributable to preferred ordinary (78)
shareholders
Attributable to ordinary 2 562 1 943
shareholders
Profit on sale of property, plant (60) (98)
and equipment
Impairment of assets 24 39
Exceptional items 46 (88)
Exceptional items - included in 17 4
income from associates and joint
ventures
Taxation 15 31
Non-controlling interests 4 10
Headline earnings - basic 2 608 1 841
Attributable to preferred ordinary 78
shareholders
Headline earnings - diluted 2 608 1 919
Earnings per share (cents)
- Basic 1 346 1 047 29
- Diluted 1 266 991 28
Headline earnings per share (cents)
- Basic 1 370 992 38
- Diluted 1 289 941 37
Preferred ordinary shares (cents)
- Basic 535
Additional information
Net asset value per share (cents) 6 137 5 529 11
Number of ordinary shares (million)
- in issue 195,1 187,0
- weighted average 190,3 185,7
- weighted average for diluted 202,3 204,0
earnings
Number of other shares in issue
(million)
- Preferred ordinary 14,5
- Deferred ordinary 15,0 15,9
Dividends per ordinary share 480 350 37
(cents)
Other information Audited Audited
2011 2010
Net finance cost Rm Rm
Net interest paid 563 633
Foreign exchange loss (gain) on 62 (222)
monetary items
Fair value (gain) loss on interest (71) 186
swaps
Net finance cost 554 597
Net finance cost - discontinued 25
operations
Exceptional items
Impairment of goodwill (52) (108)
Profit on sale of Imperial Bank 131
Limited
Recognition of deferred profit on 22
sale of Dawn Limited
Net profit on disposal and 6 13
rationalisation of investments in
subsidiaries, associates and joint
ventures
(46) 58
Fair value profit on Aviation 30
disposal group - discontinued
operations
Condensed consolidated statement of changes in equity
Share Shares Other Retained
for the year ended capital re-purchased reserves earnings
30 June Rm Rm Rm Rm
Balance at 30 June 10 (1 816) 280 11 300
2009 - Audited
Total comprehensive 64 2 021
income for the year
Statutory reserves 38 (38)
Share-based equity (57)
reserve utilisation
Movement in share- 134
based equity reserve
Dividends paid (570)
Purchase and (200)
cancellation of 2 123
775 ordinary shares
Non-controlling
interests arising on
acquisitions and
disposals of
businesses
Net decrease in non- (26)
controlling interests
Non-controlling
interests share of
dividends
Balance at 30 June 10 (1 816) 433 12 513
2010 - Audited
Total comprehensive 56 2 562
income for the year
Statutory reserves 20 (20)
Share-based equity 30 (30)
reserve transferred
to retained earnings
on vesting
Share-based equity (205)
reserve utilisation
including hedging
cost
Share-based equity 122
reserve charged to
the income statement
Dividends paid (837)
Consolidation of 5 (665) (309) 309
864 944 Imperial
shares held by Lereko
as shares repurchased
Purchase and (1) 2 000 (2 007)
cancellation of 16
000 000 ordinary
shares from
subsidiary
Purchase and (156)
cancellation of 1 465
719 ordinary shares
from open market
Reserve reallocation 261 (261)
Non-controlling
interests arising on
acquisitions of
businesses
Net decrease in non- (36)
controlling interests
Non-controlling
interests share of
dividends
Balance at 30 June 9 (220) 111 12 073
2011 - Audited
Condensed consolidated statement of changes in equity (continued)
Non-
controlling Total
Total interests equity
for the year ended 30 June Rm Rm Rm
Balance at 30 June 2009 - Audited 9 774 587 10 361
Total comprehensive income for the 2 085 238 2 323
year
Statutory reserves
Share-based equity reserve (57) (57)
utilisation
Movement in share-based equity 134 (2) 132
reserve
Dividends paid (570) (570)
Purchase and cancellation of 2 123 (200) (200)
775 ordinary shares
Non-controlling interests arising on 69 69
business combinations net of
disposals
Net decrease in non-controlling (26) (3) (29)
interests
Non-controlling interests share of (83) (83)
dividends
Balance at 30 June 2010 - Audited 11 140 806 11 946
Total comprehensive income for the 2 618 351 2 969
year
Statutory reserves
Share-based equity reserve
transferred to retained earnings on
vesting
Share-based equity reserve (205) (205)
utilisation including hedging cost
Share-based equity reserve charged 122 (4) 118
to the income statement
Dividends paid (837) (837)
Consolidation of 5 864 944 Imperial (665) (665)
shares held by Lereko as shares
repurchased
Purchase and cancellation of 16 000 (8) (8)
000 ordinary shares from subsidiary
Purchase and cancellation of 1 465 (156) (156)
719 ordinary shares from open market
Reserve reallocation
Non-controlling interests arising on 51 51
business combinations net of
disposals
Net decrease in non-controlling (36) (15) (51)
interests
Non-controlling interests share of (146) (146)
dividends
Balance at 30 June 2011 - Audited 11 973 1 043 13 016
Condensed consolidated statement of financial position
Re-presented Re-presented
Audited Audited Audited
2011 2010 2009
at 30 June Rm Rm Rm
ASSETS
Intangible assets 1 823 1 006 901
Investments in associates and 770 1 190 2 334
joint ventures
Property, plant and equipment 6 550 5 983 5 976
Transport fleet 3 627 3 399 3 483
Vehicles for hire 2 057 2 237 1 653
Deferred tax assets 661 658 645
Investments and loans 2 413 2 021 1 136
Non-current financial assets 244 206 203
Inventories 7 589 6 809 5 592
Taxation in advance 138 126 154
Trade and other receivables 7 130 6 165 5 633
Cash resources 3 531 3 199 4 655
Assets classified as held for 747 950
sale
Final instalment on sale of 477
Imperial Bank Limited
Total assets 36 533 34 223 33 315
EQUITY AND LIABILITIES
Capital and reserves
Share capital 9 10 10
Shares repurchased (220) (1 816) (1 816)
Other reserves 111 433 280
Retained earnings 12 073 12 513 11 300
Attributable to Imperial 11 973 11 140 9 774
Holdings` shareholders
Non-controlling interests 1 043 806 587
Total shareholders` equity 13 016 11 946 10 361
Liabilities
Non-redeemable, non- 441 441 441
participating preference
shares
Retirement benefit obligations 233 222 256
Interest-bearing borrowings 7 508 7 833 9 794
Insurance, investment, 2 465 2 124 2 162
maintenance and warranty
contracts
Deferred tax liabilities 549 656 652
Non-current financial 323 312 157
liabilities
Trade and other payables and 11 474 10 092 8 532
provisions
Current tax liabilities 524 335 501
Liabilities directly
associated with assets
classified as held for sale 262 459
Total liabilities 23 517 22 277 22 954
Total equity and liabilities 36 533 34 223 33 315
Capital commitments 1 007 882 544
Contingent liabilities 61 201 256
Condensed consolidated statement of cash flows
Re-presented
Audited Audited
2011 2010 %
for the year ended 30 June Rm Rm change
Cash flows from operating
activities
Cash generated by operations 6 375 4 723
before movements in working
capital
Net working capital movements (298) 30
Cash generated by operations 6 077 4 753 28
before net capital expenditure
on rental assets*
Expansion capital expenditure (157) (521)
- rental assets#
Net replacement capital (174) (367)
expenditure - rental assets#
- Expenditure (1 900) (1 489)
- Proceeds 1 726 1 122
Cash generated by operations 5 746 3 865 49
Net financing costs (563) (658)
Taxation paid (1 221) (1 075)
3 962 2 132 86
Cash flows from investing
activities
Net acquisition of (943) (415)
subsidiaries and businesses
Expansion capital expenditure (530) (442)
- excluding rental assets
Net replacement capital (667) (463)
expenditure - excluding rental
assets
Proceeds from the sale of 477 1 374
Imperial Bank Limited
Net movement in other 78 (271)
associates and joint ventures
Net movement in investments, (15) (778)
loans and other non-current
financial instruments
(1 600) (995)
Cash flows from financing
activities
Hedge cost premium paid (205) (5)
Purchase of ordinary shares (200)
for hedging of share scheme
Purchase of ordinary shares (156)
Cost incurred on cancellation (8)
of shares repurchased
Dividends paid (983) (653)
Change in non-controlling (51) (29)
interests
Repayment of IPL 3 and IC 01 (2 026)
corporate bonds
Proceeds from the issuance of 2 034
IPL 5 and IPL 6 corporate
bonds
Net decrease in other interest-(225) (697)
bearing borrowings
(1 620) (1 584)
Net increase (decrease) in 742 (447)
cash and cash equivalents
Cash and cash equivalents at 2 184 2 631
beginning of year
Cash and cash equivalents at 2 926 2 184
end of year
Analysis of cash generated by
operations
* Cash generated by operations
before movements in workings
capital
- Continuing operations 4 443
- Discontinued operations 310
4 753
# Net capital expenditure on
rental assets
- Continuing operations (955)
- Discontinued operations 67
(888)
Cash generated by operations
- Continuing operations 3 488
- Discontinued operations 377
3 865
Notes to the condensed consolidated financial statements
Basis of preparation
The condensed consolidated financial statements have been prepared in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS) and its interpretations adopted by the International
Accounting Standards Board (IASB) in issue and effective for the group at 30
June 2011 and the AC500 standards issued by the Accounting Practices Board or
its successor. This condensed consolidated information has been prepared using
the information as required by IAS 34 - Interim Financial Reporting, and comply
with the Listings Requirements of the JSE Limited. These financial statements do
not include all the information required for full annual financial statements
and should be read in conjunction with the consolidated financial statements as
at and for the year ended 30 June 2010.
These condensed consolidated financial statements were approved by the Board of
Directors on 23 August 2011.
Accounting policies
The accounting policies adopted and methods of computation used in the
preparation of the condensed consolidated financial statements are in terms of
IFRS and are consistent with those of the annual financial statements for the
year ended 30 June 2010 except for the adoption of new or revised accounting
standards, interpretations and restatements which are described below.
New accounting standards
The group adopted accounting standards and interpretations that became
applicable during the current reporting period.
None of these have had a significant impact on the group`s accounting policies
and methods of computation, and they have not impacted the 30 June 2010
statement of financial position.
Consolidation of Lereko Mobility (Pty) Limited
The preferred ordinary shares in Imperial Holdings Limited and Eqstra Holdings
Limited held by Lereko Mobility converted into ordinary shares on 30 September
2010. Part of these shares were sold on the open market and the proceeds were
used to settle Lereko Mobility`s funding obligations to third parties. It is
likely that the remaining shares will be delivered to Imperial Holdings Limited
and Eqstra Holdings Limited to settle Lereko Mobility`s vendor funding
obligations to Imperial Holdings Limited and Eqstra Holdings Limited
respectively. As it is likely that the remaining Imperial Holdings Limited
shares will revert back to Imperial, these shares are treated as shares
repurchased.
Ordinary shares cancelled
Imperial Corporate Services (Pty) Limited, a wholly owned subsidiary of Imperial
Holdings Limited, held 23 864 456 shares as treasury shares. Sixteen million of
these shares were bought back by Imperial Holdings Limited and subsequently
cancelled. As an intra-group transaction this had no significant financial
effect on the group`s results, financial position or cash flows other than
transaction costs that are normally incurred in transactions of this nature.
The group acquired 1 465 719 shares in the open market with a value of R156
million and were cancelled out of retained earnings.
Discontinued operations
Discontinued operations are now immaterial to the group. Their results are now
included in continuing operations in the income statement and under head office
and eliminations on the segment report and this impact is insignificant.
Re-presentation of the comparative information
Combined statement of comprehensive income
In the prior year a combined statement of comprehensive income was reported and
this has now been re-presented into a separate income statement and statement of
other comprehensive income.
New Financial Services segment
The group sells financial services products in a number of its segments.
A new financial services division is being reported combining the results of
insurance operations, the sale of warranty and maintenance products, income from
joint ventures on the sale of financial services, cell captive arrangements and
factoring of premium finance operations. This qualifies as a reportable segment
in terms of IFRS 8 - Operating segments.
Previously these operations were reported in the car rental and tourism,
distributorships, automotive retail, insurance and head office segments.
The insurance segment has been renamed financial services and now includes all
of the above operations. These reallocations have been re-presented for the
prior year. None of this has had an impact on group earnings.
The new financial services segment resulted in the following reclassifications:
Statement of financial position
2010 2009
Rm Rm
Insurance and investment contracts* 1 093 1 356
Deferred revenue transferred 1 031 806
Insurance, investment, maintenance and warranty 2 124 2 162
contracts - as re-presented
Trade and other payables* 10 081 8 342
Deferred revenue transferred (1 031) (806)
Trade and other payables - as re-presented 9 050 7 536
Group income statement
No impact.
In terms of IAS 1 - Presentation of financial statements, these
representations require that the 2009 statement of financial
position be presented showing the impact with related notes.
Group statement of cash flows
Cash generated by operations before movement in 4 498
working capital*
Transfer of the net movement in deferred revenue 225
to movements in insurance funds
Cash generated by operations before movement in 4 723
working capital - as re-presented
Net movement in working capital* 255
Transfer of the net movement in deferred revenue (225)
to movement in insurance funds
Net movement in working capital - as re- 30
presented
The above reclassification had no impact on cash generated by operations.
The deferred revenue relates to obligations to provide services for warranty and
maintenance products that extend beyond the end of the financial year.
Segmental information - Financial position
Car
Rental Distri-
and butor-
Total Logistics Tourism ships
Rm Rm Rm Rm
Operating assets
Operating assets* 29 506 9 333 2 835 8 947
Transfer of financial (13) (683)
services
Operating assets - as re- 29 506 9 333 2 822 8 264
presented
Operating liabilities
Operating liabilities* 12 750 3 928 499 3 878
Transfer of financial (792)
services
Operating liabilities - as 12 750 3 928 499 3 086
re-presented
Segmental information -
income statement
Profit before tax and 3 056 917 307 946
exceptional items*
Transfer of financial (13) (245)
services
Profit before tax and 3 056 917 294 701
exceptional items - as re-
presented
*Previously reported
Segmental information - Financial position continued
Head
Office
Auto- and
motive Financial Elimi-
Retail Services nations
Rm Rm Rm
Operating assets
Operating assets* 4 381 3 891 119
Transfer of financial services (10) 1 155 (449)
Operating assets - as re-presented 4 371 5 046 (330)
Operating liabilities
Operating liabilities* 1 707 2 243 495
Transfer of financial services (4) 1 190 (394)
Operating liabilities - as re- 1 703 3 433 101
presented
Segmental information - income
statement
Profit before tax and exceptional 206 506 174
items*
Transfer of financial services (6) 209 55
Profit before tax and exceptional 200 715 229
items - as re-presented
*Previously reported
Subsequent events
In terms of the Ukhamba Black Economic Empowerment transaction, 901 617 deferred
ordinary shares have converted to ordinary shares with effect from 1 July 2011.
These shares will be listed on the Johannesburg Stock Exchange.
There were no other material events that require disclosure that has occurred
subsequent to the financial position date.
Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s annual
financial statements for the year ended 30 June 2011. The audit was conducted in
accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. A copy of their audit report is available for
inspection at the company`s registered office, and is incorporated in the full
annual financial statements.
Any reference to future financial performance included in this announcement has
not been reviewed or reported on by the company`s auditors.
Preparer of financial statements
These condensed consolidated financial statements have been prepared under the
supervision of R Mumford CA(SA).
Operational segmental reporting
For management purposes, the group is organised into five major operating
divisions - logistics, car rental and tourism, distributorships, automotive
retail and financial services. These divisions are the basis on which the group
reports its primary segment information.
The principal services and products of each of these divisions are as follows:
Logistics - provides complete logistics solutions including transportation,
warehousing, inland waterway shipping, container handling and related value-
added services.
Car Rental and Tourism - vehicle rental operations span the domestic, corporate
and leisure sectors as well as inbound tourism, with extensive support services.
Tourism operations include inbound tour operations and niche tourism services.
Distributorships - this segment imports and distributes a range of passenger,
commercial vehicles, automotive products, industrial equipment, motorcycles and
light aircraft.
Automotive Retail - consists of a large network of motor vehicle and commercial
vehicle dealerships in South Africa and representing most of the major original
equipment manufacturers (OEM`s). Also manufactures and sells caravans and
canopies.
Financial Services - comprises insurance operations which are focused on a range
of short-, medium- and long-term insurance and assurance products that are
predominantly associated with the automotive market, the sale of warranty and
maintenance products, income from joint ventures on the sale of financial
services, cell captive arrangements and factoring of premium finance operations.
Segmental information - financial position
Car
Rental
Logis- Logis- and
Group Group tics tics Tourism
2011 2010 2011 2010 2011
at 30 June Rm Rm Rm Rm Rm
BUSINESS
SEGMENTATION
Assets
Intangible assets 1 823 1 006 1 191 536 85
Investments, 2 548 2 362 99 88 7
associates and
joint ventures
Property, plant and 6 550 5 983 1 858 1 680 436
equipment
Transport fleet 3 627 3 399 3 673 3 452
Vehicles for hire 2 057 2 237 1 713
Non-current 244 206
financial assets
Inventories 7 589 6 809 254 87 398
Trade and other 7 130 6 165 4 233 3 490 309
receivables
Cash in financial 1 247 1 339
services businesses
Operating assets 32 815 29 506 11 308 9 333 2 948
Deferred tax assets 661 658
Loans to associates 635 849
and other
investments
Taxation in advance 138 126
Cash and cash 2 284 1 860
equivalents
Assets classified 747
as held for sale
Final instalment on 477
sale of Imperial
Bank Limited
Total assets per 36 533 34 223
statement of
financial position
Liabilities
Retirement benefit 233 222 233 222
obligations
Insurance, 2 465 2 124
investment,
maintenance and
warranty contracts
Trade and other 11 474 10 092 4 213 3 687 426
payables and
provisions
Non-current 323 312 25 19
financial
liabilities
Non-interest- 14 495 12 750 4 471 3 928 426
bearing liabilities
Non-redeemable, non- 441 441
participating
preference shares
Interest-bearing 7 508 7 833
borrowings
Deferred tax 549 656
liabilities
Current tax 524 335
liabilities
Liabilities 262
directly associated
with assets
classified as held
for sale
Total liabilities 23 517 22 277
per statement of
financial position
GEOGRAPHIC
SEGMENTATION
Operating assets 32 815 29 506 11 308 9 333 2 948
- South Africa 26 811 24 795 7 377 6 383 2 904
- Rest of Africa 1 454 755 962 285 44
- Rest of world 4 550 3 956 2 969 2 665
Non-interest- 14 495 12 750 4 471 3 928 426
bearing liabilities
- South Africa 12 101 10 805 2 792 2 595 409
- Rest of Africa 605 279 370 58 17
- Rest of world 1 789 1 666 1 309 1 275
Interest-bearing 7 508 7 833 2 541 2 235 1 429
borrowings
- South Africa 4 227 4 861 1 833 1 624 1 449
- Rest of Africa 320 219 239 126 (20)
- Rest of world 2 961 2 753 469 485
Gross capital 3 843 3 511 1 155 1 003 1 540
expenditure
- South Africa 3 383 3 160 830 710 1 529
- Rest of Africa 103 129 89 101 11
- Rest of world 357 222 236 192
Gross capital 3 843 3 511 1 155 1 003 1 540
expenditure
Less: Proceeds on (2 315) (1 651) (360) (345) (1 175)
disposal
Net capital 1 528 1 860 795 658 365
expenditure
Segmental information - financial position (continued)
Car
Rental Distri- Distri- Auto- Auto-
and butor- butor- motive motive
Tourism ships ships Retail Retail
2010 2011 2010 2011 2010
at 30 June Rm Rm Rm Rm Rm
BUSINESS
SEGMENTATION
Assets
Intangible assets 29 394 286 119 127
Investments, 9 62 46 7 (11)
associates and
joint ventures
Property, plant and 310 2 289 2 088 1 654 1 731
equipment
Transport fleet
Vehicles for hire 1 894 263 124
Non-current
financial assets
Inventories 343 4 619 4 359 2 112 1 826
Trade and other 237 1 383 1 361 748 698
receivables
Cash in financial
services businesses
Operating assets 2 822 9 010 8 264 4 640 4 371
Deferred tax assets
Loans to associates
and other
investments
Taxation in advance
Cash and cash
equivalents
Assets classified
as held for sale
Final instalment on
sale of Imperial
Bank Limited
Total assets per
statement of
financial position
Liabilities
Retirement benefit
obligations
Insurance, 33 21
investment,
maintenance and
warranty contracts
Trade and other 499 3 513 3 065 2 009 1 703
payables and
provisions
Non-current 17
financial
liabilities
Non-interest- 499 3 563 3 086 2 009 1 703
bearing liabilities
Non-redeemable, non-
participating
preference shares
Interest-bearing
borrowings
Deferred tax
liabilities
Current tax
liabilities
Liabilities
directly associated
with assets
classified as held
for sale
Total liabilities
per statement of
financial position
GEOGRAPHIC
SEGMENTATION
Operating assets 2 822 9 010 8 264 4 640 4 371
- South Africa 2 769 8 093 7 525 4 043 3 844
- Rest of Africa 53 49 56
- Rest of world 868 683 597 527
Non-interest- 499 3 563 3 086 2 009 1 703
bearing liabilities
- South Africa 469 3 400 2 939 1 663 1 450
- Rest of Africa 30 34 32
- Rest of world 129 115 346 253
Interest-bearing 1 278 2 002 2 863 772 1 023
borrowings
- South Africa 1 287 1 337 2 340 685 946
- Rest of Africa (9) 101 102
- Rest of world 564 421 87 77
Gross capital 1 852 726 516 222 239
expenditure
- South Africa 1 826 688 503 188 222
- Rest of Africa 26
- Rest of world 38 13 34 17
Gross capital 1 852 726 516 222 239
expenditure
Less: Proceeds on (855) (384) (226) (144) (158)
disposal
Net capital 997 342 290 78 81
expenditure
Segmental information - financial position (continued)
Head Head
Office Office
and and
Financial Financial Elimi- Elimi-
Services* Services* nations nations
2011 2010 2011 2010
at 30 June Rm Rm Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 29 26 5 2
Investments, associates 2 230 2 096 143 134
and joint ventures
Property, plant and 124 123 189 51
equipment
Transport fleet (46) (53)
Vehicles for hire 498 603 (417) (384)
Non-current financial 244 206
assets
Inventories 230 219 (24) (25)
Trade and other 478 434 (21) (55)
receivables
Cash in financial 1 247 1 339
services businesses
Operating assets 5 080 5 046 (171) (330)
Deferred tax assets
Loans to associates and
other investments
Taxation in advance
Cash and cash
equivalents
Assets classified as
held for sale
Final instalment on
sale of Imperial Bank
Limited
Total assets per
statement of financial
position
Liabilities
Retirement benefit
obligations
Insurance, investment, 2 432 2 099 4
maintenance and
warranty contracts
Trade and other 1 369 1 334 (56) (196)
payables and provisions
Non-current financial 281 293
liabilities
Non-interest-bearing 3 801 3 433 225 101
liabilities
Non-redeemable, non-
participating
preference shares
Interest-bearing
borrowings
Deferred tax
liabilities
Current tax liabilities
Liabilities directly
associated with assets
classified as held for
sale
Total liabilities per
statement of financial
position
GEOGRAPHIC SEGMENTATION
Operating assets 5 080 5 046 (171) (330)
- South Africa 4 684 4 684 (290) (410)
- Rest of Africa 396 362 3 (1)
- Rest of world 116 81
Non-interest-bearing 3 801 3 433 225 101
liabilities
- South Africa 3 630 3 283 207 69
- Rest of Africa 171 150 13 9
- Rest of world 5 23
Interest-bearing (916) (448) 1 680 882
borrowings
- South Africa (916) (448) (161) (888)
- Rest of Africa
- Rest of world 1 841 1 770
Gross capital 185 37 15 (136)
expenditure
- South Africa 182 36 (34) (137)
- Rest of Africa 3 1 1
- Rest of world 49
Gross capital 185 37 15 (136)
expenditure
Less: Proceeds on (218) (9) (34) (58)
disposal
Net capital expenditure (33) 28 (19) (194)
*Financial Services was previously named Insurance and now also
includes the financial services businesses from distributorships,
car rental and tourism, automotive retail and head office and
eliminations.
These segments have been re-presented taking the financial
services aspects out of these divisions and including them within
the financial services division.
Segmental information - income statement
Con- Car
tinuing Rental
Total Opera- Logis- Logis- and
Group tions tics tics Tourism
2011 2010 2011 2010 2011
for the year Rm Rm Rm Rm Rm
ended 30 June
BUSINESS
SEGMENTATION
Revenue
- Sales of goods 38 182 30 433 2 294 855 1 162
- Rendering of 23 849 20 474 18 209 15 673 2 071
services
- Gross premiums 2 558 2 471
received
- Other 78 60 72 59 5
64 667 53 438 20 575 16 587 3 238
Inter-segment 61 99 75
revenue
64 667 53 438 20 636 16 686 3 313
Operating 58 931 49 082 18 782 14 921 2 485
expenses
including cost of
sales
Investment income (209) (214)
Fair value (76) (97)
(gains) losses on
investments
Depreciation, 1 528 1 396 743 725 477
amortisation and
impairments
Recoupments (33) (17) (25) (21)
(excluding
properties)
Operating profit 4 526 3 288 1 136 1 061 351
Recoupments from 7 51 37 31
sale of
properties, net
of impairments
Amortisation of (15) (15)
intangible assets
arising on
business
combinations
Foreign exchange (33) 49 (6) 2
(losses) gains
Fair value
(losses) gains on
foreign exchange
derivatives (18) (38)
Impairment 24
reversals of
share scheme
loans
Gain on early 27
settlement of
European bond
Fair value gains 279 78
on Lereko call
option
Profit before net 4 746 3 479 1 152 1 094 351
financing costs
and exceptional
items
Net financing (554) (597) (216) (195) (141)
costs including
fair value gains
and losses
Income from 34 174 17 18 1
associates and
joint ventures
Profit before 4 226 3 056 953 917 211
taxation and
exceptional items
GEOGRAPHIC
SEGMENTATION
Revenue 64 667 53 438 20 636 16 686 3 313
- South Africa 50 330 41 838 11 333 9 783 3 171
- Rest of Africa 3 120 1 106 2 455 525 142
- Rest of World 11 217 10 494 6 848 6 378
Operating profit 4 526 3 288 1 136 1 061 351
- South Africa 3 922 2 730 644 702 324
- Rest of Africa 239 182 142 61 27
- Rest of world 365 376 350 298
Net financing 554 597 216 195 141
costs
- South Africa 474 501 194 177 138
- Rest of Africa 27 27 17 13 3
- Rest of world 53 69 5 5
Segmental information - income statement (continued)
Car
rental Distri- Distri- Auto- Auto-
and butor- butor- motive motive
tourism ships ships Retail Retail
for the year 2010 2011 2010 2011 2010
ended 30 June Rm Rm Rm Rm Rm
BUSINESS
SEGMENTATION
Revenue
- Sales of goods 998 19 656 15 148 15 013 13 453
- Rendering of 1 905 1 466 955 1 496 1 395
services
- Gross premiums
received
- Other 1 1
2 904 21 122 16 103 16 509 14 849
Inter-segment 37 825 789 641 694
revenue
2 941 21 947 16 892 17 150 15 543
Operating 2 163 19 986 15 893 16 545 15 103
expenses
including cost
of sales
Investment
income
Fair value 2
(gains) losses
on investments
Depreciation, 397 124 79 99 94
amortisation and
impairments
Recoupments (1) (7) 4 9 1
(excluding
properties)
Operating profit 382 1 844 914 497 345
Recoupments from (2) (1)
sale of
properties net
of impairments
Amortisation of
intangible
assets arising
on business
combinations
Foreign exchange (1) 5 6 1
(losses) gains
Fair value
(losses) gains
on foreign
exchange
derivatives (26) 3
Impairment
reversals of
share scheme
loans
Gain on early
settlement of
European bond
Fair value gains
on Lereko call
option
Profit before 381 1 823 923 496 344
net financing
costs and
exceptional
items
Net financing (88) (199) (214) (109) (134)
costs including
fair value gains
and losses
Income from 1 18 (8) (10)
associates and
joint ventures
Profit before 294 1 642 701 387 200
taxation and
exceptional
items
GEOGRAPHIC
SEGMENTATION
Revenue 2 941 21 947 16 892 17 150 15 543
- South Africa 2 769 19 120 14 315 15 410 13 838
- Rest of Africa 172 268 178
- Rest of World 2 559 2 399 1 740 1 705
Operating profit 382 1 844 914 497 345
- South Africa 337 1 813 878 461 322
- Rest of Africa 45 1 (3)
- Rest of world 30 39 36 23
Net financing 88 199 214 109 134
costs
- South Africa 82 169 190 105 131
- Rest of Africa 6 7 7
- Rest of world 23 17 4 3
Segmental information - income statement (continued)
Head Head
Office Office
and and
Financial Financial Elimi- Elimi-
Services* Services* nations nations
for the year ended 2011 2010 2011 2010
30 June Rm Rm Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 57 (21)
- Rendering of services 589 502 18 44
- Gross premiums 2 558 2 471
received
- Other 1 (1)
3 147 2 973 76 22
Inter-segment revenue 262 290 (1 864) (1 909)
3 409 3 263 (1 788) (1 887)
Operating expenses 2 848 2 792 (1 715) (1 790)
including cost of sales
Investment income (253) (261) 44 47
Fair value (gains) (76) (99)
losses on investments
Depreciation, 133 135 (48) (34)
amortisation and
impairments
Recoupments (excluding (3) (7)
properties)
Operating profit 760 696 (62) (110)
Recoupments from sale 6 (28) 15
of properties net of
impairments
Amortisation of
intangible assets
arising on business
combinations
Foreign exchange (1) (1) (32) 43
(losses) gains
Fair value (losses)
gains on foreign
exchange
derivatives 8 (41)
Impairment reversals of 24
share scheme loans
Gain on early 27
settlement of European
bond
Fair value gains on 279 78
Lereko call option
Profit before net 759 701 165 36
financing costs and
exceptional items
Net financing costs 111 34
including fair value
gains and losses
Income from associates 18 14 (20) 159
and joint ventures
Profit before taxation 777 715 256 229
and exceptional items
GEOGRAPHIC SEGMENTATION
Revenue 3 409 3 263 (1 788) (1 887)
- South Africa 3 155 3 033 (1 859) (1 900)
- Rest of Africa 254 230 1 1
- Rest of World 70 12
Operating profit 760 696 (62) (110)
- South Africa 692 617 (12) (126)
- Rest of Africa 68 79 1
- Rest of world (51) 16
Net financing costs (111) (34)
- South Africa (132) (79)
- Rest of Africa 1
- Rest of world 21 44
*Financial Services was previously named Insurance and now also includes the
financial services businesses from distributorships, car rental and tourism,
automotive retail and head office and eliminations.
These segments have been re-presented taking the financial services aspects out
of these divisions and including them within the financial services division.
Business combinations
Subsidiaries and Nature
businesses of Operational Date
acquired business segment acquired
CIC Holdings FMCG industry Logistics November
Limited 2010
E-Z-GO Golf Golf carts Distributorships September
Carts distribution 2010
EWC Express SA Express Logistics October 2010
(Pty) Limited logistics
Danmar Autobody Panelshops Car Rental October 2010
Graffiti Designs Signage and Distributorships July 2010
(Pty) Limited advertising
Individually
immaterial
business
combinations
Total
Business combinations (continued)
Purchase
Interest consideration
acquired transferred
Subsidiaries and businesses acquired (%) Rm
CIC Holdings Limited 100 724
E-Z-GO Golf Carts 100 101
EWC Express SA (Pty) Limited 80 44
Danmar Autobody 100 92
Graffiti Designs (Pty) Limited 60 41
Individually immaterial business 150
combinations
Total 1 152
Reason for the acquisition
CIC Holdings, a previously JSE Limited entity, was acquired to expand our
logistics business into the rest of Africa.
E-Z-GO Golf Carts was acquired to expand our distribution business.
EWC Express was acquired as a strategic entry into the parcel and express
logistics market.
Danmar Autobody was acquired to increase market share in the panelshops
industry.
Graffiti Designs was acquired to enter into the vehicle signage business.
EWC
CIC E-Z-GO Express
Total Holdings Golf SA
Limited Carts (Pty) Ltd
Fair value of assets Rm Rm Rm Rm
acquired and
liabilities assumed
at date of
acquisition:
Assets
Intangible assets 201 170
Investments, loans, 29 29
associates and joint
ventures
Property, plant and 126 38 1 2
equipment
Transport fleet 160 15
Vehicles for hire 46 30
Deferred tax assets 14 9
Inventories 232 183 17
Trade and other 539 313 1 31
receivables
Due by group 35 16
companies
Cash resources 130 80 4
1 512 838 49 52
Liabilities
Deferred tax (43) (33) (1)
liabilities
Interest-bearing (267) (58) (24)
borrowings
Non-current (2)
financial
liabilities
Trade and other (645) (414) (3) (24)
payables and
provisions
Current tax (7) (4)
liabilities
(964) (509) (3) (49)
Acquirees` carrying 548 329 46 3
amount at
acquisition
Less: Non- (51) (6) (1)
controlling
interests
Net assets acquired 497 323 46 2
Purchase 1 152 724 101 44
consideration
transferred
- Cash 1 073 724 101 24
- Contingent 79 20
consideration
Fair value of 26
previously held
interest
Excess of purchase 681 401 55 42
price over net
assets acquired
(intangibles)
Graffiti Individually
Danmar Designs immaterial
Autobody (Pty) Ltd acquisitions
Fair value of assets acquired Rm Rm Rm
and liabilities assumed at
date of acquisition:
Assets
Intangible assets 31
Investments, loans, associates
and joint ventures
Property, plant and equipment 57 4 24
Transport fleet 145
Vehicles for hire 16
Deferred tax assets 5
Inventories 2 1 29
Trade and other receivables 18 176
Due by group companies 7 12
Cash resources 1 45
59 31 483
Liabilities
Deferred tax liabilities (9)
Interest-bearing borrowings (1) (5) (179)
Non-current financial (2)
liabilities
Trade and other payables and (4) (10) (190)
provisions
Current tax liabilities (3)
(5) (15) (383)
Acquirees` carrying amount at 54 16 100
acquisition
Less: Non-controlling (7) (37)
interests
Net assets acquired 54 9 63
Purchase consideration 92 41 150
transferred
- Cash 92 41 91
- Contingent consideration 59
Fair value of previously held 26
interest
Excess of purchase price over 38 32 113
net assets acquired
(intangibles)
Details of contingent consideration
The contingent consideration requires the group to pay the vendors an additional
total amount of R79 million over three years if the entities` net profit after
tax exceeds certain earnings targets. Acquisition-related cost amounting to R15
million have been excluded from the purchase consideration and have been
recognised as an expense in the period, within `Net operating expenses` in the
income statement.
EWC
CIC E-Z- Express
GO SA
Total Holdings Golf (Pty)
Limited Carts Ltd
Rm Rm Rm Rm
Impact of the acquisitions on
the results of the group
From the dates of acquisition,
the acquired businesses
contributed:
Revenue 2 761 1 761 48 130
Attributable profit 70 45 5 5
Had all the acquisitions been
consolidated from 1 July 2010
the income statement would have
included:
Revenue 3 860 2 645 56 173
Attributable profit 99 59 8 5
Impact of the acquisitions on the results of the group continued
Graffiti Individually
Danmar Designs immaterial
Auto- (Pty) Acquisi-
body Ltd tions
Rm Rm Rm
Impact of the acquisitions on the
results of the group
From the dates of acquisition, the
acquired businesses contributed:
Revenue 106 126 590
Attributable profit (8) 9 14
Had all the acquisitions been
consolidated from 1 July 2010 the
income statement would have
included:
Revenue 162 126 698
Attributable profit (6) 9 24
Trade and other receivables acquired had gross contractual amounts of R549
million of which R10 million was doubtful. None of the goodwill is expected to
be deductible for tax purposes. Non-controlling interest has been calculated
based on their proportionate share in net assets.
Imperial Holdings Limited:
Registration number: 1946/021048/06
Ordinary share code: IPL ISIN: ZAE000067211
Preference share code: IPLP ISIN: ZAE000088076
Non-executive directors: TS Gcabashe (Chairman), T Dingaan,
S Engelbrecht, P Langeni, MJ Leeming, MV Moosa,
RJA Sparks, A Tugendhaft (Deputy chairman), Y Waja
Executive directors: HR Brody (Chief Executive), OS Arbee,
MP de Canha, RL Hiemstra, AH Mahomed, GW Riemann (German),
M Swanepoel
Other Executive Committee Members: M Akoojee, BJ Francis,
DD Gnodde, M Mosola
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 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
Sponsor: Merrill Lynch SA (Pty) Limited, 138 West Street, Sandown Sandton, 2196
The results announcement is available on the Imperial website:
www.imperial.co.za
Date: 24/08/2011 07:05:59 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.