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T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 1 Contents Heading at date Mission Statement (inside front cover) 25 Segment Information 2 Group Profile and Structure 26 Balance Sheets 3 Group Financial Highlights 27 Income Statements 4 Board of Directors 28 Statements of Changes in Equity 6 Definitions 29 Cash Flow Statements 30 Notes to the Annual Financial Statements 7 Group Ten-Year Financial Review 55 Subsidiaries 8 Group Ten-Year Statistical Review 56 Directors’ Emoluments 9 Value-Added Statement 57 Directors’ Shareholding 10 Group Operations 58 Analysis of Ordinary Shareholders 15 Report of the Chairman 59 Stock Exchange Performance 16 Report of the Chief Executive Officer 59 Certification by the Company Secretary 18 Corporate Governance 60 Administration 22 Approval of Financial Statements 60 Shareholders’ Diary 23 Independent Auditor’s Report 61 Notice of Meeting 24 Report of the Directors Form of Proxy T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 2 Group Profile and Structure RETAIL MOTOR DEALERSHIPS CAR HIRE VOLVO 100% JAGUAR 100% FIRST CAR RENTAL 100% SWEDOCAR Jaguar Umhlanga Johannesburg, Bloemfontein, Cape Town, Hatfield, Jaguar Cape Town Port Elizabeth, Kimberley, Upington, Menlyn, Umhlanga Rocks East London, Nelspruit, George, Durban, HONDA 100% AUTO NORDIC Richards Bay, Pietermaritzburg and Honda Durban Bryanston, Westrand, Sandton Cape Town Airports, Durban, Honda Hatfield Cape Town central, Kempton Park, FORD/MAZDA 100% Honda Menlyn Sandton, Randburg, Pretoria, Lyndhurst, KEMPSTER AUTO Honda Pinetown Richards Bay, Pietermaritzburg, Saldanha, Durban, Bluff, Umhlanga Rocks NISSAN DIESEL 100% Polokwane, Kimberley, Upington, STEYNS AUTO CMH COMMERCIAL Braamfontein, Stellenbosch, Rondebosch, Pretoria Westmead Boksburg, Pinetown, Emerald Casino RAND AUTO Pietermaritzburg (Vanderbijlpark), Industria, Bloemfontein, Randburg Port Elizabeth, Jacobs, Menlyn, METRO AUTO LAND ROVER 100% Phalaborwa, Umhlanga Ridge, Witbank, Gezina Land Rover Cape Town Midrand HATFIELD AUTO Land Rover Pretoria Hatfield Land Rover Umhlanga MARINE AND LEISURE NISSAN 100% BMW/MINI CMH MARINE AND LEISURE 100% DATCENTRE NISSAN Menlyn Auto 100% CMH RECREATIONAL PRODUCTS Durban, Pietermaritzburg, Umhlanga Auto 75% Randburg Hillcrest, Pinetown Lyndhurst Auto 100% CMH NISSAN WATERWORLD RENAULT 100% Midrand, Northcliff Randburg, Cape Town Midrand FIAT/ALFA ROMEO 100% VOLKSWAGEN 100% CMH Umhlanga DISTRIBUTION AND Melrose Arch CMH Pietermaritzburg FRANCHISING Cape Town CMH Pinetown BONERTS 85% PEUGEOT 100% GENERAL MOTORS 100% Johannesburg Peugeot Hatfield EAST RAND GM Turffontein Peugeot Menlyn Boksburg Peugeot Cape Town MANDARIN MOTORS 75% WEST RAND GM Peugeot Durban 28 independent dealers Constantia Peugeot Johannesburg South NATIONAL WORKSHOP EQUIPMENT 70% TOYOTA/LEXUS 100% LAMBORGHINI 100% Durban MIDWAY TOYOTA Bryanston, Cape Town Alberton GATEWAY TOYOTA/LEXUS INVESTMENT CARS 100% FINANCIAL AND SUPPORT Umhlanga Rocks Bryanston, Hatfield, Cape Town, SERVICES Gateway NORMANS TOYOTA FULL MAINTENANCE Craighall BMW APPROVED REPAIR CENTRE LEASING 100% MANDARIN MOTORS 100% Wynberg 100% TREASURY 100% Mandarin Hatfield Umhlanga Rocks 75% WARRANTY 100% Mandarin Pinetown CREDIT LIFE 100% VEHICLE INSURANCE 100% CMH FINANCE 100% CMH INSURANCE 100% CMH CARSHOP 100% 2 CMH Annual Report 2008 T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 3 Group Financial Highlights 2008 2007 % Change Total assets (R’000) 2 247 845 2 371 165 (5) Net asset value per share (cents) 451 421 7 Revenue (R’000) 8 811 995 9 085 649 (3) Operating profit (R’000) 212 237 339 757 (38) Net profit (R’000) 111 908 193 678 (42) Return on shareholders’ funds (%) 21,6 40,4 (47) Earnings per share (cents) 91,6 175,4 (48) Headline earnings per share (cents) 97,7 174,0 (44) Dividends per share – traditional (cents) 61,6 52,6 17 – special (cents) – 140,0 (100) Headline earnings per share Return on shareholders’ funds 174,0 39,8 40,4 155,1 35,3 27,9 107,1 26,3 25,0 24,2 24,9 97,7 23,7 21,6 68,4 61,6 56,6 52,6 46,7 38,7 36,6 29,2 32,3 21,0 11,8 13,6 15,9 6,6 8,0 10,0 19992000 2001 20022003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Dividends per share Headline earnings per share Net asset value per share Revenue per employee 453 451 3 115 421 3 010 2 418 2 438 334 2 033 265 1 714 1 725 221 1 426 186 1 194 1 213 157 120 104 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 CMH Annual Report 2008 3 T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 4 Board of Directors From left to right: STUART JACKSON, VUSI KHANYILE, MALDWYN ZIMMERMAN and STOFFEL ODENDAAL Inset: LINDIWE GADD STUART JACKSON STOFFEL ODENDAAL BCom (Hons) (Tax Law), CA (SA) Franchise director for Volvo, Jaguar, Land Rover, Volkswagen, Financial director Lamborghini, Investment Cars Age: 55 Age: 56 Appointed to the board in 1986 Appointed to the board in 1994 VUSI KHANYILE LINDIWE GADD BCom (Hons) MA Hons (Social Sciences) Non-executive Non-executive Age: 57 Age: 37 Appointed to the board in 2007 Appointed to the board in 2007 MALDWYN ZIMMERMAN Executive chairman to 17 October 2007 Non-executive chairman and member of remuneration committee from 17 October 2007 Age: 73 Appointed to the board in 1976 4 CMH Annual Report 2008 T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 5 T3IB00312 CMH Annual Report 2008 – 25 April 2008 – Page 5 – PROOF 7b From left to right: JEBB McINTOSH, RAY NETHERCOTT, ZEE CELE, JOHN EDWARDS and MARK CONWAY JEBB McINTOSH JOHN EDWARDS CA (SA) CA (SA) Chief executive officer Independent, non-executive Age: 62 Chairman of audit committee, chairman of remuneration Appointed to the board in 1976 committee Age: 72 RAY NETHERCOTT Appointed to the board in 2002 Franchise director for Ford, Mazda, BMW, Peugeot, Mini, Bonerts MARK CONWAY Age: 58 CA (SA) Appointed to the board in 2001 Franchise director for Nissan, Fiat, Alfa, Honda, General Motors, Renault, Nissan Diesel, Waterworld ZEE CELE Age: 52 BCom, Postgrad Dip Tax, MAcc (Tax) Appointed to the board in 2000 Independent, non-executive Age: 55 Appointed to the board in 2007 CMH Annual Report 2008 5 T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 6 Definitions Acid-test ratio Current assets less inventory divided by total current liabilities including short-term loans. Basic earnings per share Net profit attributable to equity holders divided by the weighted average number of shares in issue. Current ratio Current assets divided by current liabilities including short-term loans. Dividend cover Headline earnings per share divided by dividends paid per share. Dividend yield Dividends paid (excluding special dividends) divided by the year-end share price on the JSE Limited. Earnings yield Earnings per share divided by the year-end share price on the JSE Limited. Headline earnings Net profit attributable to equity holders after excluding the impact of goodwill assets impaired and profit/losses on disposal of investments, divided by the weighted average number of shares in issue. Net interest cover Operating profit before net finance costs divided by net finance costs. Net asset value per share Total equity divided by the number of shares in issue at balance sheet date. Return on Net profit attributable to equity holders of the Company divided by the average ordinary shareholders’ funds shareholders’ equity during the year. Revenue per employee Revenue divided by the number of employees in service at year-end. Weighted average The number of shares in issue at the beginning of the year increased by shares issued during the year number of shares weighted on a time basis for the period during which they were issued. in issue 6 CMH Annual Report 2008 T3IB00312 CMH AR 2008 4/27/08 9:21 PM Page 7 T3IB00312 CMH Annual Report 2008 – 25 April 2008 – Page 7 – PROOF 7b Group Ten-Year Financial Review 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 BALANCE SHEET ASSETS Plant and equipment 71 717 69 441 57 621 25 856 19 481 18 266 18 551 17 317 11 648 5 902 Investments 124 379 106 001 1 082 488 1 242 2 834 3 184 3 384 3 762 4 020 Deferred taxation 36 396 32 296 27 614 16 873 7 159 4 876 5 360 7 466 6 964 6 465 Goodwill 144 346 154 574 153 174 29 450 7 450 10 391 15 609 11 510 6 000 2 071 Current assets 1 871 007 2 008 853 1 527 337 1 082 178 822 152 688 897 500 394 416 640 307 841 203 334 Total assets 2 247 845 2 371 165 1 766 828 1 154 845 857 484 725 264 543 098 456 317 336 215 221 792 EQUITY AND LIABILITIES Share capital and reserves 472 716 438 089 477 141 346 851 272 302 225 500 189 197 159 857 122 584 102 720 Minority interest 12 121 12 217 1 289 286 9 237 (900) (354) 17 (1 035) Interest-bearing debt 6 838 8 556 – 2 434 3 784 12 532 9 375 12 002 9 600 5 548 Advance from minorities 270 724 285 845 4 668 625 618 200 1 140 1 050 900 1 871 Assurance funds 26 217 37 66932 63921 98716 82910 893–––– Lease liabilities 77 905 63 49144 09931 830–––––– Other current liabilities 1 381 324 1 525 298 1 206 992 750 832 563 942 475 902 344 286 283 762 203 114 112 688 Total equity and liabilities 2 247 845 2 371 165 1 766 828 1 154 845 857 484 725 264 543 098 456 317 336 215 221 792 INCOME STATEMENT Revenue 8 811 995 9 085 649 6 756 951 4 454 213 3 220 632 2 591 397 2 647 535 2 050 755 1 489 016 1 277 412 Profit to revenue (%) 2,4 3,7 3,7 3,8 3,1 3,4 2,9 3,0 3,1 3,1 Operating profit 212 237 339 757 252 711 167 187 100 857 87 861 77 001 61 677 45 814 39 388 Net finance costs (45 472) (32 082) (12 731) (2 902) (6 372) (10 097) (12 636) (3 873) (24) (1 424) Profit before taxation 166 765