Combined Motor Holdings Limited 2009 Annual Report Our Mission

CUSTOMERS To provide a total commitment to customer satisfaction in all aspects of business, and to ensure that our customers are treated fairly and equitably by a motivated, well-trained team of specialists.

EMPLOYEES To provide a stable and challenging work environment in which employees are treated on an equal opportunity basis with open lines of communication, are encouraged to participate to the maximum of their ability and are rewarded commensurate with their achievement.

SUPPLIERS To conduct our relationship in an ethical and supportive manner conducive to the achievement of mutual long-term profit and market share objectives.

SHAREHOLDERS To produce a consistent, meaningful growth in earnings and dividends, commensurate with the risks involved, after making adequate provision for future expansion.

In doing so, to become a valued, respected and committed contributor to the society in which we all coexist.

CMH Annual Report 2009 Contents Heading at date

Mission Statement (inside front cover) 2 Group Profile and Structure 3 Group Financial Highlights 4 Board of Directors 5 Group Ten-Year Statistical Review 5 Definitions 6 Group Ten-Year Financial Review 7 Value-Added Statement 8 Group Operations 13 Report of the Chairman 14 Report of the Chief Executive Officer 16 Corporate Governance 20 Report of the Audit Committee 21 Approval of the Financial Statements 22 Independent Auditor’s Report 23 Report of the Directors 24 Segment Information 26 Balance Sheets 27 Income Statements 28 Statements of Changes in Equity 29 Cash Flow Statements 30 Notes to the Annual Financial Statements 54 Subsidiaries 55 Directors’ Emoluments 56 Directors’ Shareholding 57 Analysis of Ordinary Shareholders 58 Stock Exchange Performance 58 Certification by the Company Secretary 59 Administration 59 Shareholders’ Diary 60 Notice of Meeting Form of Proxy (inserted)

CMH Annual Report 2009 Group Profile and Structure

RETAIL MOTOR DEALERSHIPS CAR HIRE VOLVO 100% JAGUAR 100% FIRST 100% SWEDOCAR Jaguar Umhlanga Johannesburg, Bloemfontein, Cape Town, Hatfield Jaguar Cape Town Port Elizabeth, Kimberley, Upington, Pretoria East, Umhlanga Rocks East London, Nelspruit, George, Durban, HONDA 100% AUTO NORDIC Richards Bay, Pietermaritzburg and Honda Hatfield Bryanston, Westrand Cape Town Airports, Durban, Cape Town Honda Menlyn central, Kempton Park, Sandton, FORD/MAZDA 100% Honda Pinetown Randburg, Pretoria, Lyndhurst, Richards KEMPSTER AUTO NISSAN DIESEL 100% Bay, Pietermaritzburg, Polokwane, Durban, Bluff, Umhlanga Rocks CMH COMMERCIAL Kimberley, Upington, Stellenbosch, STEYNS AUTO Westmead, Pietermaritzburg Rondebosch, Boksburg, Pinetown, Pretoria Emerald Casino (Vanderbijlpark), Industria, RAND AUTO LAND ROVER 100% Bloemfontein, Port Elizabeth, Jacobs, Randburg Land Rover Cape Town Menlyn, Umhlanga Ridge, Witbank, METRO AUTO Land Rover Pretoria Midrand, Mthatha Gezina Land Rover Umhlanga HATFIELD AUTO BMW/MINI MARINE AND LEISURE Hatfield CMH MARINE AND LEISURE 100% Menlyn Auto 100% CMH RECREATIONAL PRODUCTS NISSAN 100% Umhlanga Auto 75% Randburg DATCENTRE NISSAN Lyndhurst Auto 100% Durban, Pietermaritzburg WATERWORLD VOLKSWAGEN 100% Hillcrest, Pinetown Randburg, Cape Town Cape Town CMH NISSAN DISTRIBUTION AND Midrand PEUGEOT 100% Peugeot Menlyn FRANCHISING FIAT/ALFA ROMEO 100% BONERTS 85% Peugeot Cape Town CMH Umhlanga Rocks Johannesburg, Turffontein Peugeot Durban CMH Pietermaritzburg Peugeot Johannesburg South MANDARIN MOTORS 95% GENERAL MOTORS 100% Pretoria, Durban LAMBORGHINI 100% EAST RAND GM Bryanston, Cape Town NATIONAL WORKSHOP EQUIPMENT 70% Boksburg Durban WEST RAND GM INVESTMENT CARS 100% Constantia Bryanston, Cape Town ARMORMAX 100% UMHLANGA GM Bryanston BMW APPROVED REPAIR CENTRE Umhlanga Rocks Wynberg 100% FINANCIAL AND SUPPORT TOYOTA/LEXUS 100% Umhlanga Rocks 75% SERVICES CMH TOYOTA ALBERTON TREASURY 100% SUZUKI 100% Alberton WARRANTY 100% Pinetown CMH TOYOTA UMHLANGA CREDIT LIFE 100% Gateway VEHICLE INSURANCE 100% CMH TOYOTA MELROSE CMH FINANCE 100% Melrose Arch CMH INSURANCE 100% LEXUS GATEWAY CMH CARSHOP 100% Gateway CMH IT 100%

2 CMH Annual Report 2009 Group Financial Highlights

2009 2008 % Change

Total assets (R’000) 1 968 287 2 247 845 (12) Net asset value per share (cents) 420 451 (7) Revenue (R’000) 6 581 641 8 811 995 (25) Operating profit (R’000) 46 378 212 237 (78) Net profit attributable to equity holders (R’000) 8 127 98 173 (92) Return on shareholders’ funds (%) 1,7 21,6 (92) Earnings per share (cents) 7,6 91,6 (92) Headline earnings per share (cents) 24,6 97,7 (75) Dividends per share (cents) 28,0 61,6 (55)

Headline earnings per share (cents) Return on shareholders’ funds (%)

174,0 39,8 40,4

155,1 35,3

27,9 107,1 26,3 24,2 24,9 97,7 23,7 21,6

68,4 61,6 56,6 52,6 46,7 38,7 36,6 32,3 28,0 21,0 24,6 13,6 15,9 8,0 10,0 11,8 1,7

2000 200120022003 2004 2005 2006 2007 2008 2009 20002001 2002 2003 2004 2005 2006 2007 2008 2009 Dividends per share Headline earnings per share

Net asset value per share (cents) Revenue per employee (R’000)

453 451 3 115 3 010 421 420 2 722 2 418 2 438 334 2 033 265 1 714 1 725 221 1 426 186 1 213 157 120

20002001 2002 2003 2004 2005 2006 2007 2008 2009 20002001 2002 2003 2004 2005 2006 2007 2008 2009

CMH Annual Report 2009 3 Board of Directors

MALDWYN ZIMMERMAN Non-executive chairman Chairman of remuneration committee Age: 74 Appointed in 1976

JEBB McINTOSH VUSI KHANYILE CA (SA) BCom (Hons) Chief executive officer Non-executive Age: 63 Age: 58 Appointed in 1976 Appointed in 2007

STUART JACKSON JOHN EDWARDS BCom (Hons) (Tax Law), CA (SA) CA (SA) Financial director Independent, non-executive Age: 56 Chairman of audit committee Appointed in 1986 and member of remuneration committee Age: 73 Appointed in 2002

RAY NETHERCOTT ZEE CELE Franchise director for Ford, BCom, Postgrad Dip Tax Mazda, BMW, Peugeot, MAcc (Tax) Mini, Bonerts, Lamborghini and Independent, non-executive Investment Cars Member of audit committee Age: 59 Age: 56 Appointed in 2001 Appointed in 2007

MARK CONWAY CA (SA) LINDIWE GADD Franchise director for Nissan, MA Hons (Social Sciences) Fiat, Alfa, Honda, General Non-executive Motors, Nissan Diesel and Age: 38 Waterworld Appointed in 2007 Age: 53 Appointed in 2000

4 CMH Annual Report 2009 Group Ten-Year Statistical Review

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

BALANCE SHEET Interest-bearing debt to total assets (%) 0,3 0,3 0,4 0,2 0,2 0,4 1,7 1,7 2,6 2,9 Interest-bearing debt to total equity (%) 1,2 1,4 1,9 0,9 0,7 1,4 5,6 5,0 7,5 7,8 Current ratio (ratio) 1,3 1,3 1,3 1,3 1,4 1,4 1,4 1,4 1,4 1,4 Acid-test ratio (ratio) 0,4 0,4 0,4 0,3 0,5 0,5 0,5 0,6 0,5 0,6 Net asset value per share (cents) 420 451 421 453 334 265 221 186 157 120 Total assets per employee (R’000) 814 795 786 638 627 541 483 352 317 274

INCOME STATEMENT Weighted average number of shares in issue (‘000) 107 470 107 195 105 867 105 055 103 245 102 010 101 930 101 930 101 930 101 210 Headline earnings per share (cents) 24,6 97,7 174,0 155,1 107,1 68,4 56,6 46,7 38,7 32,3 Basic earnings per share (cents) 7,6 91,6 175,4 157,2 108,9 60,6 49,2 40,6 38,7 29,1 Dividends per share – traditional (cents) 28,0 61,6 52,6 36,6 21,0 15,9 13,6 11,8 10,0 8,0 – special (cents) – – 140,0––––––– Dividend cover – traditional (times) 0,9 1,6 3,3 4,2 5,1 4,3 4,2 4,0 3,9 4,1 Net interest cover (times) 1,4 4,7 10,6 19,9 57,6 15,8 8,7 6,1 15,9 n/a Number of employees 2 418 2 829 3 018 2 771 1 842 1 584 1 502 1 545 1 438 1 227 Revenue per employee (R’000) 2 722 3 115 3 010 2 438 2 418 2 033 1 725 1 714 1 426 1 213 Operating profit on average total equity (%) 9,9 45,4 73,2 61,2 51,6 40,5 42,4 44,1 43,7 40,7 Return on shareholders’ funds (%) 1,7 21,6 40,4 39,8 35,3 24,9 24,2 23,7 27,9 26,3

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 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 shareholders’ equity during shareholders’ funds 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

CMH Annual Report 2009 5 Group Ten-Year Financial Review

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 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 75 069 71 717 69 441 57 621 25 856 19 481 18 266 18 551 17 317 11 648 Investments 146 848 124 379 106 001 1 082 488 1 242 2 834 3 184 3 384 3 762 Deferred taxation 43 535 36 396 32 296 27 614 16 873 7 159 4 876 5 360 7 466 6 964 Goodwill 123 001 144 346 154 574 153 174 29 450 7 450 10 391 15 609 11 510 6 000 Current assets 1 579 834 1 871 007 2 008 853 1 527 337 1 082 178 822 152 688 897 500 394 416 640 307 841

Total assets 1 968 287 2 247 845 2 371 165 1 766 828 1 154 845 857 484 725 264 543 098 456 317 336 215

EQUITY AND LIABILITIES Ordinary shareholders’ equity 451 905 472 716 438 089 477 141 346 851 272 302 225 500 189 197 159 857 122 584 Minority interest (433) 12 121 12 217 1 289 286 9 237 (900) (354) 17 Interest-bearing debt 5 398 6 838 8 556 – 2 434 3 784 12 532 9 375 12 002 9 600 Advance from minorities 245 613 270 724 285 845 4 668 625 618 200 1 140 1 050 900 Assurance funds 19 458 26 217 37 669 32 639 21 987 16 829 10 893 – – – Lease liabilities 88 613 77 905 63 491 44 099 31 830 – – – – – Other current liabilities 1 157 733 1 381 324 1 525 298 1 206 992 750 832 563 942 475 902 344 286 283 762 203 114

Total equity and liabilities 1 968 287 2 247 845 2 371 165 1 766 828 1 154 845 857 484 725 264 543 098 456 317 336 215

INCOME STATEMENT Revenue 6 581 641 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

Profit to revenue (%) 0,7 2,4 3,7 3,7 3,8 3,1 3,4 2,9 3,0 3,1 Operating profit 46 378 212 237 339 757 252 711 167 187 100 857 87 861 77 001 61 677 45 814 Net finance costs (33 295) (45 472) (32 082) (12 731) (2 902) (6 372) (10 097) (12 636) (3 873) (24)

Profit before taxation 13 083 166 765 307 675 239 980 164 285 94 485 77 764 64 365 57 804 45 790 Taxation (11 023) (54 857) (113 997) (73 870) (51 573) (32 376) (27 588) (26 335) (19 615) (16 380)

Net profit 2 060 111 908 193 678 166 110 112 712 62 109 50 176 38 030 38 189 29 410 Minority interest 6 067 (13 735) (7 995) (953) (277) (244) (11) 3 338 1 245 239

Attributable profit 8 127 98 173 185 683 165 157 112 435 61 865 50 165 41 368 39 434 29 649 Dividends – traditional (30 094) (65 988) (55 745) (38 586) (21 658) (16 186) (13 862) (12 028) (2 161) (9 785) – special – – (149 853) – – – – – – –

Retained earnings/(deficit) (including special dividend) (21 967) 32 185 (19 915) 126 571 90 777 45 679 36 303 29 340 37 273 19 864 Retained earnings/(deficit) (excluding special dividend) (21 967) 32 185 148 670 126 571 90 777 45 679 36 303 29 340 37 273 19 864

6 CMH Annual Report 2009 Value-Added Statement

2009 2009 2008 2008 R’000 % R’000 %

WEALTH CREATED Revenue 6 581 641 8 811 995 Cost of goods and services (6 072 633) (8 121 613)

Value added – current year 509 008 690 382 – prior years, distributed in current year 21 967 –

530 975 690 382

WEALTH DISTRIBUTION To employees – remuneration and benefits 431 797 81 467 584 68 To lenders – net finance costs on borrowings 33 295 6 45 472 6 To government – taxation 11 023 2 54 857 8 To shareholders – dividends 30 094 6 65 988 9 Retained for reinvestment in the Group – depreciation 24 766 5 24 296 4 – retained earnings ––32 185 5

530 975 100 690 382 100

WEALTH DISTRIBUTION

2009 2008

6% 5% 4% 5% 2% 9% 6% Employees 8% Lenders

Government 6% Shareholders

Depreciation

Retained earnings 81% 68%

CMH Annual Report 2009 7 Group Operations

RETAIL MOTOR DEALERSHIPS

FRANCHISE Volvo Operating locations Cape Town, Hatfield, Bryanston, Umhlanga Rocks, Pretoria East, Westrand Staff employed 166 Premier Automotive Group senior management (Volvo/Jaguar/Land Rover) S Atkinson, A Bell, W Edgar, N Fourie, O Fourie, D Gray, C Grobler, A Pretorius, E Vorster

FRANCHISE Land Rover Operating locations Umhlanga Rocks, Cape Town, Pretoria Staff employed 132

FRANCHISE Jaguar Operating locations Umhlanga Rocks, Cape Town Staff employed 20

FRANCHISE Peugeot Operating locations Menlyn, Cape Town, Durban, Johannesburg South Staff employed 111 Senior management R Botha, J Graham, J Mangen, R Steyl

FRANCHISE Nissan Operating locations Durban, Pinetown, Pietermaritzburg, Hillcrest, Midrand Staff employed 198 Senior management G Gray, M Holmes, A Hughes, C Massey-Hicks, C McHardy, S Singleton, J van der Linde, S van Vuuren

8 CMH Annual Report 2009 Heading at date

FRANCHISE Nissan Diesel Operating locations Westmead, Pietermaritzburg Staff employed 67 Senior management R Byng

FRANCHISE Ford, Mazda Operating locations Durban, Bluff, Umhlanga Rocks, Pretoria, Gezina, Hatfield, Randburg Staff employed 350 Senior management M Dovey, K Kruger, T Morey, P Ras, R Spence, A Sumares, Z van Greuning, C Wainwright

FRANCHISE General Motors Operating locations Boksburg, Constantia – West Rand, Umhlanga Rocks Staff employed 118 Senior management S Loder, B Nicolson, S Singleton

FRANCHISE Volkswagen Operating location Cape Town Staff employed 45 Senior management C Douglas

FRANCHISE BMW, Mini Operating locations Melrose Arch, Menlyn, Umhlanga Rocks Staff employed 248 Senior management A Ellis, S Michael, W van Zyl www.autoumhlanga.co.za, www.menlynauto.co.za, www.lyndhurstauto.co.za

CMH Annual Report 2009 9 Group Operations

FRANCHISE Toyota Operating locations Alberton, Gateway, Melrose Arch Staff employed 151 Senior management A de Kock, P de Villiers, G Garrod, C Webber FRANCHISE Lexus Operating location Gateway Staff employed 9 Senior management J van Buuren, C Webber

FRANCHISE Fiat, Alfa Romeo Operating locations Umhlanga Rocks, Pietermaritzburg Staff employed 42 Senior management R Downs, G Gray, M Holmes

FRANCHISE Honda Operating locations Hatfield, Menlyn, Pinetown Staff employed 89 Senior management D Grobler, A Potgieter, C Webber

FRANCHISE Lamborghini Operating locations Bryanston, Cape Town Staff employed 7 Senior management M Malherbe www.lamborghini.autoworld.co.za

FRANCHISE Suzuki Operating location Pinetown Staff employed 6 Senior management C Smith, G Gray

10 CMH Annual Report 2009 Heading at date

FRANCHISE Investment Cars Operating locations Bryanston, Cape Town Staff employed 51 Senior management M Bruce, G Kingston www.investmentcars.co.za

FRANCHISE Armormax Operating location Bryanston Staff employed 5 Senior management G Anderson

FRANCHISE BMW Approved Repair Centre Operating locations Wynberg, Umhlanga Rocks Staff employed 101 Senior management R Naidoo, G Seafield

DISTRIBUTION AND FRANCHISING FRANCHISE Bonerts, National Workshop Equipment Operating locations Bonerts – Johannesburg, Turffontein National Workshop Equipment – Durban Staff employed 70 Senior management R Margach, G Thomas, M Vieira www.bonerts.co.za, www.nwe.co.za

FINANCIAL AND SUPPORT SERVICES FRANCHISE CMH Finance, CMH Insurance, CMH Carshop, CMH IT Staff employed 54 Senior management G Bartel, S Cumming, JP de Bruyn, C Downs, S Eloff, K Fonseca, A Jithoo, A Julius, R Minnaar, E Utermark, G van Dyk, J Young www.cmh.co.za, www.cmhcarshop.co.za

CMH Annual Report 2009 11 Group Operations

IMPORT AND DISTRIBUTION FRANCHISE Mandarin Motors Staff employed 26 Senior management M Smal, I Pardy, A Tidbury

CAR HIRE FRANCHISE Operating locations Johannesburg, Durban, Port Elizabeth, East London, (airports) Cape Town, George, Bloemfontein, Nelspruit, Kimberley, Richards Bay, Pietermaritzburg, Upington Operating locations Durban, Cape Town central, Kempton Park, Randburg, Richards Bay, Sandton, Pretoria, Midrand, Pietermaritzburg, Polokwane, Kimberley, Upington, Stellenbosch, Boksburg, Pinetown, Lyndhurst, Bloemfontein, Industria, Port Elizabeth, Jacobs, Menlyn, Umhlanga Ridge, Witbank, Emerald Casino (Vanderbijlpark), Rondebosch, Mthatha Staff employed 293 Senior management C Ault, B Barritt (managing director), U Crouse, S Duriex, V Govender, L Hall, B Hattingh, N Lippiatt, R McKay, C McWilliams, A Nel, M Nortje, C Reid, C Taylor, B Troeberg (director), M Voges, C Webber, K Werth, U Wessels www.firstcarrental.co.za

MARINE AND LEISURE FRANCHISE CMH Marine and Leisure Operating locations Randburg (2), Cape Town Staff employed 59 Senior management P Buys, F Fensham, C Lanham-Love, D Savadier www.waterworld.co.za

12 CMH Annual Report 2009 Report of the Chairman

It gives me pleasure to present my report on the On the positive side, interest rates have fallen activities of the Group during the year ended 2,5 percentage points since December 2008 28 February 2009. and a further 2,5 percentage points cut is The year was undoubtedly the most difficult I expected this year. This will help consumers have experienced. The challenges presented reduce their levels of indebtedness and hasten during the previous year have been exacerbated the time when they are ready and able to incur by the global economic crisis, triggered by the fresh debt. sub-prime loans meltdown in the United States. BLACK ECONOMIC EMPOWERMENT Dominated by a 25% fall in revenue, primarily In contrast to numerous reports of BEE deals as the result of the slump in vehicle sales, which are failing because of high interest rates operating profit fell 78% to R46,4 million, and declining profitability, I am happy to report and attributable headline earnings declined that the Group’s transaction with Thebe 75% to R26,4 million. Investment Corporation remains on a sound footing. Strong Group cash flows have enabled One positive feature of the year’s trading was the Group’s firm grasp on its cash flow. Cash it to maintain its scheduled debt servicing and generated from operations enabled the Group capital repayments, and forecasts indicate that to fund a dividend payment of R30 million in the forthcoming year will be no different. June 2008, repay loans and dividends of THE YEAR AHEAD “One positive R31,5 million to its BEE partner, and still end the A continued difficult trading environment is year with cash resources of R212 million (2008: expected. Budgets for the new year anticipate R223 million). feature of the modest or no volume growth in the various year’s trading With an eye on funding working capital for operating segments, and the expected profit future expansion, and in view of the ever- improvement will be largely driven by cost was the tightening lending criteria being applied by cutting measures and interest cost savings finance houses, the directors have through tight control over working capital Group’s firm recommended that no dividend be paid in levels. respect of the year under review. grasp on its DIRECTORS AND MANAGEMENT ECONOMIC ENVIRONMENT CL (Stoffel) Odendaal resigned from the Group cash flow” As the saying goes, if the USA sneezes, the in October 2008 after 26 years of employment, whole world catches a cold – and the credit the last 14 of which he served as an executive crisis has certainly caused an impact across the director. I thank Stoffel for his untiring efforts globe. Whilst South Africa is in relatively good and invaluable input, and wish him well as he shape compared with many of the world’s pursues his personal interests. super-powers, economic growth, already declining, is expected to fall further as more The board of directors now comprises two households come under increasing strain as a independent, non-executive, three non- result of falls in disposable income and net executive and four executive members. The worth. Rising unemployment will continue to adverse trading conditions place a greater strain undermine income and spending levels. and burden of responsibility on the team and I The country’s currency is an area of vulnerability. take this opportunity to thank them for the Currency weakening fuels inflation in emerging tough and uncompromising decisions which countries that have current account deficits and they have been forced to make to ensure the depend on inflows of foreign capital. Loss of ongoing viability of the Group. investor confidence in South Africa has To the Group’s management and staff, I realise translated into the depreciation of the rand that it has been a year of more work for less against major currencies. reward. However, your persistent pursuit of the In the retail motor industry, the consensus basic tenants of good business will enable the forecast is for new vehicle sales to decline by Group to realise its dream of another decade of 8% during calendar 2009. Motor vehicle rising earnings. I recognise and commend your finance houses are licking the wounds caused efforts. by their liberal lending criteria during the period preceding the introduction of the National Credit Act. Tougher requirements, and increased costs of capital, have meant a 180 degree turn, to the extent that on average less than one of M Zimmerman three applicants for vehicle finance is approved. 17 April 2009

CMH Annual Report 2009 13 Report of the Chief Executive Officer

The year under review was arguably the most Despite the disappointing earnings, the Group’s difficult trading period for the retail motor balance sheet remains sound, and the cash flow industry in the past 50 years. The month-on- statement records strong cash generation. month decline in new vehicle sales continued to Interest-bearing debt is a negligible R5 million the extent that the industry has now and the Group’s current ratio and quick ratio experienced 24 consecutive months of negative have been constant at 1,3 and 0,4 respectively growth. Over a two-year period the cumulative for a number of years. Cash of R69 million effect during a number of months was a 40% generated from operating activities enabled the fall in sales levels. Group to fund the abovementioned R30 million dividend and to maintain its scheduled In contrast to conservative predictions made in distribution of R32 million (dividends and loan 2006/7 of a national passenger and light repayments) to its BEE partner. Strong cash flow commercial market of between 800 000 and control is viewed as a vital component of the 1 000 000 units sales by 2010, the reality is that Group’s future. In a recent report, international sales for calendar 2008 were 498 900 units. Of ratings agency Fitch expressed the view that concern however, is the continued falling trend motor companies with strong cash generation during this period. The average monthly sales and financial flexibility will be better positioned level during the first six months was 44 750, to weather the economic downturn. The “The year whilst that for the second six months was industry has already experienced difficulty in 38 340. During the last quarter of the Group’s renewing finance facilities, with banks reporting under review financial year, sales averaged 30 939 per month. that in excess of 1 000 dealers, mainly small was arguably The effects of locally high interest rates, petrol used vehicle operations, have had facilities and food prices, coupled with over-indebted terminated or severely reduced. the most consumers, have been worsened by the international credit crisis and the consequent RETAIL MOTOR difficult limited availability of vehicle finance facilities. National passenger vehicle sales declined 23% and light commercial vehicles 17% during the trading period FINANCIAL REVIEW financial year, and it is estimated that the used for the retail A number of positives were achieved during the market reduced similarly. The principal reasons year. The gross margin on revenue increased for the fall were the high debt levels under motor industry from 15,0% to 16,7%. Despite an inflation rate which consumers were labouring, and the in the past of 8%, operating expenses were reduced by consequent reluctance of the motor finance 7%, and tight control over cash resources houses to extend further credit during a period 50 years” enabled a 27% reduction in net interest costs. when they too were facing high write-offs and However, in the face of a 25% decline in an increased cost of funds. Whilst customer revenue, it was inevitable that profit before interest on showroom floors was high, the taxation would be severely impacted. credit approval levels fell from approximately A conservative review of the Group’s goodwill 55% to below 25%. Customers that gained asset indicated the need for an impairment approval were charged higher interest rates charge of R21,6 million. The tax charge for the than they previously enjoyed, with the result that the first 1,5 percentage points drop in the year is disproportionately high principally prime rate was offset by the higher bank because of the goodwill impairment charge margin. which is not tax deductible, and because of assessable losses in various subsidiaries which The three highest value overhead expenses in a management believes will not be recoverable. typical dealership are staff costs, property rentals and demonstration vehicles/petrol. Since The overall result is that basic earnings per share its peak during mid-2007, the Group’s declined 92% and headline earnings, headcount in this segment has been reduced by discounting the effects of the goodwill 640 to its present level of 2 005 employees. This impairment charge and capital profits, fell 75%. reduction has been mainly effected by the On the strength of the prior year earnings, a closure of unprofitable operations and the dividend of R30 million was paid in June 2008; trimming of backroom unproductive staff. Only however no dividend was paid in December a small portion represents sales and/or 2008 and the directors have not recommended workshop productive functions. Over the same a payment for June 2009. period the number of properties occupied by

14 CMH Annual Report 2009 the Group has been cut by 17 through termination of FINANCIAL SERVICES businesses or rationalisation and sharing of facilities. In some As predicted, revenue from the sale of insurance policies has instances the lease rentals have had to be carried although the reduced following the National Credit Act’s prohibition of the premises were vacant, but all such costs, and the expected sale of term policies. The sale of monthly policies has increased, future commitments, have been expensed in the current year. but with the high early termination rate being experienced, it is The fleet of demonstration vehicles, for both customer and staff unlikely that future income levels will improve materially. use, has been reduced by 44%. PROSPECTS Fortunately the Group’s workshops and parts departments Whilst it appears that the retail motor market has bottomed, performed well, providing consistent returns and a buffer uncertainty surrounds the timing of the upturn. I believe that against the more volatile sales departments. national sales will be down on last year, with the first half being During 2007, the Group secured the franchise for the import in line with the second half of calendar 2008, and modest and local distribution of various Chinese-sourced vehicles. For a growth during the third and fourth quarters. The Group’s number of reasons the venture did not prove successful and is budget predicts little or no volume growth in the retail motor in the process of being discontinued. The imported vehicles are and marine and leisure divisions. Substantial restructuring not of the same high build quality as locally manufactured charges, principally retrenchment and early lease termination vehicles but, priced correctly, do offer competitive value for costs, have been fully accounted for and will reduce operating money. A number of well-publicised incidents with competitive costs going forward. Lower interest rates are expected to reduce Chinese-sourced vehicles soured both the customer and finance finance costs. The net result is that a relatively modest increase houses’ perception of the units, and sales were affected. The in sales volumes could yield a substantial bottom line fourth quarter weakening of the South African currency improvement. When this volume growth will materialise is increased the replacement price of the vehicles to the extent difficult to predict. that the pricing gap necessary to compete with the local market was no longer possible. The Group’s exposure to this segment APPRECIATION of the market is insignificant, and will be liquidated during the During the year the Group lost the service of two long-standing next four months. stalwarts. Stoffel Odendaal, an executive director, retired in October 2008 to follow his personal interests. I appreciate his MARINE AND LEISURE 26 years of service and the honest and ethical way in which he The depressed economic conditions were keenly felt by this served the Group. division, which operates largely at the luxury end of the market. Revenue fell 42%, forcing a major overhaul of the business and Solly Ussuph, a man who worked at subsidiary Kempster its operating locations. The head count of 134 in mid-2007 has Sedgwick before it became part of the Group, passed away last been reduced to 59, operating locations have been cut from month after 40 years’ service. He held the position of senior five to two, and assets from R157 million to R122 million. regional accountant and was held in high esteem by all who A further asset reduction of R15 million is expected in the next were in contact with him. My condolences are extended to his six months. This division markets quality brands and, with its family. low cost base, has the capacity to return substantial margins when the economy turns. To the motor manufacturers, finance houses, insurance companies and other suppliers who have supported the Group CAR HIRE during the year I express my gratitude. The new trading and brand name “First Car Rental” was successfully launched in April 2008, and mid-year the division I offer my thanks to the executive team, management and staff concluded an alliance with Car Rental, a major European who have performed bravely in a stormy sea. In the face of brand based in Germany. major restructuring which, especially where staff retrenchments Although revenue increased 18%, higher interest costs of are involved, is never easy nor pleasant, it is difficult to focus on holding the vehicle fleet, coupled with lower resale values in the the business of making profit. To your credit you maintained depressed used vehicle market, eroded margins to the extent confidence in the Group’s future and worked untiringly to attain that the division ended the year with an operating loss of the key business objectives. R1 million. Daily hire rates remain competitive and have shown little growth over the past 18 months, and the international credit crisis has affected foreign tourism.

On the positive side, the recent interest rate reductions have had, and will continue to have, a favourable effect. Each one percentage point reduction saves the division R4,1 million annually. In addition, the major sporting events scheduled in the JD McIntosh country during this and next year will boost revenue. 17 April 2009

CMH Annual Report 2009 15 Corporate Governance

Combined Motor Holdings Limited and its subsidiaries are fully – ensuring ethical behaviour of all employees and compliance committed to the principles of fairness, accountability, with all laws and regulations; transparency and integrity associated with good corporate – identifying and evaluating suitable candidates for possible governance. Through this process shareholders and other appointment to the board; and stakeholders may derive assurance that the Group is being ethically managed according to prudently determined risk – selecting, monitoring and evaluating the directors and other parameters in compliance with generally accepted corporate senior executives. practices. The Group, in all material respects, complied with the There are no long-term contracts of service between the Group King II Report on Corporate Governance during the accounting and any of the directors. period, and the board of directors continually strives to enhance compliance. All directors have unrestricted access to the chairman, chief executive officer and financial director/company secretary. BOARD OF DIRECTORS Directors are encouraged, at the reasonable cost of the Group, The board comprises two independent, non-executive directors, to seek independent, professional advice on all matters which three non-executive directors and four executive directors. The they consider necessary. board applies the guidelines contained in the Listings Requirements of the JSE Limited when considering a director’s Meetings of the board and its sub-committees are held at independence. The roles of chairman and chief executive officer varying intervals during the year. The chairman and chief do not vest in the same person. This ensures a balance of executive officer encourage full and proper deliberation on all power and authority between them. matters requiring the board’s attention and obtain optimum input from all directors. All directors are required to retire from office every three years at the annual general meeting and, being eligible, may submit Attendance at meetings during the year under review, is tabled themselves for re-election at the same annual general meeting. at the top of page 17. During the year, new directors may be appointed by the board, AUDIT AND RISK ASSESSMENT COMMITTEE subject to confirmation of this election by the shareholders at The audit and risk assessment committee comprising the next annual general meeting. Accordingly, the appointments independent, non-executive members, JTM Edwards (chairman) of directors by the board during the financial year are required and LCZ Cele, met twice during the year. The meetings were to be confirmed by the shareholders at the next annual general attended, by invitation, by the chief executive officer, the meeting. chairman, the financial director and representatives of the The independent and non-executive directors bring with them internal audit department and external auditor. diversity of experience, insight and independent judgement on The function of the committee is to assist the board in issues of strategy, performance, resources, marketing and discharging its oversight responsibilities in the following areas: standards of conduct. – compliance with applicable laws and regulations; The executive directors are closely involved in the day-to-day business activities of the Group and are responsible for ensuring – transparency and integrity of financial statements; that decisions, strategies and views of the board are timeously – effectiveness of the internal controls and risk management implemented. procedures; The board is responsible for: – performance of the internal audit department; – overall Group strategy; – appropriate involvement and liaison with the independent, – acquisition and divestment policy; external auditor and the audit process; and

– approval of major contracts; – overview of corporate governance.

– consideration of financing matters; To enable the committee to fulfil its duties in these areas, – monitoring of operational performance against budget and comprehensive reports are presented to the committee by: key performance indicators, and reviewing the Group’s – the external auditor, in respect of their audit plan and the published results; results of the financial audit and any other non-audit services – effective, timeous and transparent communication with provided by the external auditor in compliance with the stakeholders; Group’s policy on non-audit services;

– the appointment of sub-committees of the board and the delegation of authority and responsibility to such sub- committees;

16 CMH Annual Report 2009 Full Audit/risk Remuneration Executive Director board committee committee committee

LCZ Cele 1/2 2/2 MPD Conway 2/2 2/2* 5/5 JTM Edwards 2/2 2/2 2/2 L Gadd 1/2 SK Jackson 2/2 2/2* 2/2* 5/5 VP Khanyile 1/2 JD McIntosh 2/2 2/2* 2/2* 5/5 RTAC Nethercott 2/2 5/5 CL Odendaal (resigned 31 October 2008) 1/2 1/5 M Zimmerman 1/2 1/2* 1/2 J Alderslade (alternate to VP Khanyile) 1/2* * by invitation

– the internal audit department regarding their independence, – providing effective communication between the board, the effectiveness and adequacy of resources of the management and the internal and external auditors. department and providing an overview of the results of its The committee assesses its performance both collectively and activities for the period; and that of individual members on an annual basis. The results of – the financial director, covering the financial results of the this self-assessment are reported to the board. Group. Committee members have unrestricted access to all employees, The committee updates the board on the committee’s activities. directors and information required in the performance of their During the current period, and in order to fulfil its mandate, duties. The committee is satisfied that, based on their activities these activities included: in the 2009 financial year, the Group’s risk management and – a review of the procedures in place for identifying business internal control processes are adequate and are functioning and financial risks and the appropriateness and adequacy of effectively, and that the Group has adequate resources to the systems of internal and operational control designed to continue in operational existence for the foreseeable future. minimise such risks; REMUNERATION COMMITTEE – a review of the Group’s policy for preventing and detecting During 2008, the non-executive chairman of the Group, fraud and a review of the results of management’s M Zimmerman, was appointed as chairman of the remuneration investigations of reported fraudulent acts or any other committee which included JTM Edwards. Two meetings were unethical activity by employees or suppliers; held during the year and these were attended, by invitation, by the chief executive officer and financial director. – understanding and confirming that the financial reporting process used to prepare financial statements, analyst The function of the committee is to review the Group’s briefings and press announcements is accurate, balanced and remuneration strategy to ensure that executive and senior consistent with published financial information; management are fairly and appropriately remunerated for their contribution to the operating and financial performance of the – a review of the financial statements and of the key Group. The committee also recommends the fees that should accounting policies and judgements or estimates made by be paid to non-executive directors. Remuneration packages management which have a material impact on the financial encompass the full range of benefits including basic salary, statements; profit incentives, share options and retirement benefits. The – confirming the Group’s intention and ability to operate as a Group’s remuneration philosophy is to pay industry-competitive going concern; basic rates and then to reward employees through incentive schemes for superior performance. No discrimination is made – reviewing the effectiveness of the system for monitoring between individuals based on age, gender, marital or other compliance with laws and regulations; personal status. A significant proportion of the remuneration of – an evaluation of the independence of the external auditor all senior personnel is performance-based. and recommending the appointment of and the fees payable to the external auditor; and

CMH Annual Report 2009 17 Corporate Governance

INTERNAL AUDIT exceeded its training and development targets. Full compliance The board of directors is responsible for the Group’s systems of with the requirements of these Acts has been achieved and the internal control and for reviewing their effectiveness. These Group has timeously submitted the report in terms of Section systems, which are designed to manage rather than eliminate 21 of the Employment Equity Act. As a result, the Group has, the risk of failure to achieve business objectives, provide over the past four years, recouped in full its costs in respect of reasonable, but not absolute, assurance against material the Skills Development Levy. An extract of the most recent misstatement or loss. Within these systems is an ongoing report submitted, as at 31 August 2008, is tabled at the top of process to identify, evaluate and manage the significant risk page 19. areas faced by the Group during the year under review. The Group continues to move towards an organisational A detailed operational checklist has been compiled. structure which reflects the diverse mix of the population, and Comprehensive compliance testing is conducted at regular supports the principles embodied in the National Skills intervals. Written reports on areas of non-compliance are Development strategy. Rapid growth in the retail motor industry has led to a shortage of manpower skills. The Group is focusing prepared for the audit and risk assessment committee and on training a second tier of management in all branches and operational managers, and follow-up testing scheduled. departments. This programme has already proved successful, EXTERNAL AUDITOR with more than 75% of senior appointments being from within The Group’s external auditor, PricewaterhouseCoopers Inc., the Group. The programme of adding 40 technical apprentices provides an independent opinion on the financial statements. per annum, the majority of which are historically disadvantaged The external audit provides reasonable, but not absolute, individuals, is proving successful and will be continued. assurance of the fair presentation of the financial statements. Presently, 39% (2008: 30%) of the Group’s upper and middle management structure (dealer principals, department managers, GOING CONCERN accountants and finance/insurance specialists) are from a After making diligent enquiries, the directors have a reasonable previously disadvantaged background. expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Such ENVIRONMENTAL AND SOCIAL expectation is based on cash flow forecasts and available The board of directors acknowledges that the achievement of financing facilities. Forecasts were stress-tested using environmental, health and safety standards is an important conservative profit estimates and working capital requirements, feature of the Group’s social responsibility. Although the Group’s and cash resource levels remained positive. For this reason the major activities do not pose a significant threat to the financial statements have been prepared on the “going environment, of particular concern to the board is the maintenance of safety and environmental standards in the concern” basis. Group’s workshops. Regular inspections are performed to CODE OF ETHICS ensure that safety measures, particularly with regard to vehicle- The Group strives to conduct its business in a manner which lifting equipment and oil-dispensing systems, comply with rigid conforms to the highest standards of ethical and moral policies and procedures. behaviour, and in compliance with all laws and regulations. The Group involvement in contributing to the social upliftment of Group has adopted a Code of Ethics incorporating these values. the disadvantaged members of our society is, for the main part, This Code of Ethics encompasses the principles endorsed in the decentralised to the geographic areas represented by the Code of Corporate Practices and Conduct, as outlined in the various operations. Major programmes supported include: King II Report on Corporate Governance. The Code of Ethics is regularly communicated to employees and they are aware that – “Reach for a Dream”; and failure to comply will result in disciplinary action. – Training and Resources in Early Education (“TREE”). This is an The Group subscribes to “Whistle Blowers”, which encourages organisation which promotes early childhood development all employees to report suspicious or unethical behaviour within primarily in rural areas, and provides education on parenting, the Group on a confidential basis. Reported incidents are childcare, HIV/AIDS and self-help schemes. submitted to the chief executive officer of the Group and the The significant potential risk posed by HIV/AIDS to both Group audit and risk assessment committee for investigation. employees and society in general is recognised. Awareness seminars have been conducted at all Group trading locations. EMPLOYMENT EQUITY Employment equity policies have been implemented within the BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“B-BBEE”) Group to create an environment in which employees from The Group is fully committed to the government’s Broad-based previously disadvantaged backgrounds are trained, instructed, Black Economic Empowerment (“B-BBEE”) policies and the promoted and rewarded according to their initiative, loyalty and directors believe that their commitment to the development of work ethic. The Group has, during each year since the inception B-BBEE initiatives will generate long-term benefits for both the of the Skills Development Act and Employment Equity Act, Group and the country as a whole.

18 CMH Annual Report 2009 Designated Non-designated

White Foreign Occupational levels Male Female male nationals TOTAL

A C I A C IWWM F

Top management 2 6 60 1 69

Senior management 6 7 49 3 5 11 65 161 1 308

Professionally qualified and experienced specialists 145 64 193 17 13 48 207 389 6 1 082

Skilled technical and academically qualified 38 4 46 44 36 56 151 26 1 402

Semi-skilled 420 49 87 20 6 4 8 55 6 655

Unskilled 80 3 9 17 1 2 11 123

Total August 2008 689 127 386 101 61 119 439 702 14 1 2 639

August 2007 813 141 441 122 67 129 543 859 6 2 3 123

With effect from 1 March 2006, the Group sold a 25% equity The Codes of Good Practice on Black Economic Empowerment stake in its Umhlanga Rocks BMW/Mini dealership to two black released in February 2007 have made it a business imperative to individuals, one female. This was followed in December 2006 determine a B-BBEE scorecard rating. The scorecard rating for by the sale to Thebe Investment Corporation of a 15% equity the car rental segment, falling under CMH Car Hire (Proprietary) share of the Group’s operations. The Group advanced Limited, has been independently verified at Level 5. The R124 million to assist Thebe with the funding of this acquisition remainder of the Group will be scored and rated as one entity. and included two Thebe-appointed directors on the board of The scorecard rating will be ascertained as at the financial year- directors. VP Khanyile was appointed in January 2007 and end and is scheduled to be completed in July 2009 and L Gadd in July 2007. In addition, LCZ Cele was appointed to the independently verified in August 2009. board of directors and to the audit and risk assessment committee in July 2007 as an independent, non-executive director.

CMH Annual Report 2009 19 Report of the Audit Committee

The audit committee of the Company and the Group has 2. Members of the audit committee pleasure in submitting this report, as required by sections 269A 2.1 The audit committee comprises two independent non- and 270A of the Companies Act. executive directors, LCZ Cele and JTM Edwards (chairman). 1. Functions of the audit committee The audit committee has discharged its functions as follows: 2.2 The members of the audit committee have at all times acted in an independent manner. 1.1 Reviewed the interim and year-end financial statements, culminating in a recommendation to the board. In the 3. Frequency of meetings course of its review the committee: The audit committee met twice in the financial year under review. • took appropriate steps to ensure that the financial statements are prepared in accordance with 4. Attendance International Financial Reporting Standards (IFRS) The internal and external auditors, in their capacity as and the South African Companies Act; auditors to the Company and Group, attended and reported • considered and, when appropriate, made to all meetings of the audit committee. recommendations on internal financial controls; and Executive directors and relevant senior managers attended • dealt with concerns or complaints relating to the the meetings by invitation. following: 5. Confidential meetings – accounting policies; Audit committee agendas provide for confidential meetings – internal audit; between the committee members and the internal and external auditors. – the auditing or content of the annual financial statements; and 6. Independence of external auditor – internal financial controls; During the year under review the audit committee reviewed a report by the external auditor and, after conducting its own 1.2 Reviewed the external audit reports on the annual review, confirmed the independence of the auditor. financial statements; 7. Expertise and experience of financial director 1.3 Confirmed the internal audit charter and audit plan; As required by JSE Listings Requirements 3.84(h), the audit 1.4 Reviewed the internal audit and risk management committee has satisfied itself that the financial director has reports and, where relevant, made recommendations to appropriate expertise and experience. the board;

1.5 Evaluated the effectiveness of risk management, controls and the governance processes;

1.6 Verified the independence of the external auditor;

1.7 Approved the audit fees and engagement terms of the external auditor; and JTM Edwards 1.8 Determined the nature and extent of allowable non- Chairman audit services and approved the contract terms for the provision of non-audit services by the external auditor. 17 April 2009

20 CMH Annual Report 2009 Approval of the Financial Statements

DIRECTORS’ RESPONSIBILITY – the Company and the Group operated in a well-established The board of directors reports as follows with reference to both control environment, which is well documented and regularly the Company and the Group: reviewed. This incorporates risk management and internal control procedures, which are designed to provide – the directors are responsible for the preparation, integrity, reasonable, but not absolute, assurance that assets are and fair presentation of the financial statements. The safeguarded and the risks facing the business are controlled; financial statements presented on pages 23 to 57 have been prepared in accordance with International Financial Reporting – the going-concern basis has been adopted in preparing the Standards (“IFRS”) and in the manner required by the financial statements. The directors have no reason to believe Companies Act of South Africa and include amounts based that the Group or any Company within the Group will not be on judgements and estimates made by management; going concerns in the foreseeable future, based on forecasts and available cash resources. These financial statements – the directors consider that in preparing the financial support the viability of the Company and the Group; statements they have used the most appropriate accounting policies, consistently applied and supported by reasonable – the Code of Corporate Practices and Conduct has been and prudent judgements and estimates, and that all IFRSs adhered to; and that they consider to be applicable have been followed; – PricewaterhouseCoopers Inc., the Group’s external auditor, – the directors are satisfied that the information contained in audited the financial statements, and their report is presented the financial statements fairly presents the results of on page 22. operations for the year and the financial position of the The financial statements were approved by the board of directors Company and Group at year-end. The directors also prepared and are signed on its behalf by: the other information included in the annual report and are responsible for both its accuracy and its consistency with the financial statements;

– the directors have responsibility for ensuring that accounting records are kept. The accounting records should disclose with JD McIntosh M Zimmerman reasonable accuracy the financial position of the Company Chief executive officer Chairman and Group to enable the directors to ensure that the financial statements comply with the relevant legislation; 17 April 2009

CMH Annual Report 2009 21 Independent Auditor’s Report

TO THE MEMBERS OF COMBINED MOTOR HOLDINGS LIMITED The procedures selected depend on the auditor’s judgement, We have audited the annual financial statements and group including the assessment of the risks of material misstatement of annual financial statements of Combined Motor Holdings the financial statements, whether due to fraud or error. In making Limited, which comprise the directors’ report, the balance sheet those risk assessments, the auditor considers internal control and the consolidated balance sheet as at 28 February 2009, the relevant to the entity’s preparation and fair presentation of the income statement and consolidated income statement, the financial statements in order to design audit procedures that are statement of changes in equity and the consolidated statement appropriate in the circumstances, but not for the purpose of of changes in equity, the cash flow statement and consolidated expressing an opinion on the effectiveness of the entity’s internal cash flow statement for the year then ended, and a summary of control. An audit also includes evaluating the appropriateness of significant accounting policies and other explanatory notes, as set accounting policies used and the reasonableness of accounting out on pages 23 to 57. estimates made by the directors, as well as evaluating the overall presentation of the financial statements. DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Company’s directors are responsible for the preparation and We believe that the audit evidence we have obtained is sufficient fair presentation of these financial statements in accordance with and appropriate to provide a basis for our audit opinion. International Financial Reporting Standards, and in the manner OPINION required by the Companies Act of South Africa. This responsibility In our opinion, the financial statements present fairly, in all includes: designing, implementing and maintaining internal material respects, the financial position of the Company and of controls relevant to the preparation and fair presentation of the Group as at 28 February 2009, and of their financial financial statements that are free from material misstatement, performance and their cash flows for the year then ended in whether due to fraud or error; selecting and applying appropriate accordance with International Financial Reporting Standards and accounting policies; and making accounting estimates that are in the manner required by the Companies Act of South Africa. reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and PricewaterhouseCoopers Inc. plan and perform the audit to obtain reasonable assurance Director: ME Jones whether the financial statements are free from material misstatement. Registered Auditor

An audit involves performing procedures to obtain audit evidence Durban about the amounts and disclosures in the financial statements. 17 April 2009

22 CMH Annual Report 2009 Report of the Directors

Your directors have pleasure in submitting their report on the SK Jackson affairs of the Company and the Group during the year ended VP Khanyile (non-executive) 28 February 2009. JD McIntosh (chief executive officer) RTAC Nethercott NATURE OF BUSINESS M Zimmerman (non-executive chairman) The Company’s business is that of an investment holding company, its principal assets being its investment in and loan to JW Alderslade (alternate to VP Khanyile) CMH Holdings (Proprietary) Limited, and a preference share CL Odendaal resigned as a director with effect from investment in Main Street 445 (Proprietary) Limited. 31 October 2008.

Through its subsidiaries the Group has significant interests in The executive directors represent the key management of the retail motor, car hire, marine and leisure and financial services. Company and the Group. Full details of the Group’s operations and operating locations appear on pages 2 and 8 to 12. Messrs JTM Edwards and SK Jackson retire by rotation at the forthcoming annual general meeting but, being eligible, offer The Company is listed in the “General Retailers” sector of the themselves for re-election. Brief curricula vitae of Messrs JSE Limited. JTM Edwards and SK Jackson appear in the Notice of Meeting. OPERATING RESULTS The secretary of the Company is SK Jackson, whose business and Full details of the operating results of the Company and the postal addresses are: Group are set out in the attached financial statements. Business Postal SHARE CAPITAL 1 Wilton Crescent PO Box 1033 Details of the authorised and issued share capital are set out in Umhlanga Ridge Umhlanga Rocks note 13 to the attached financial statements. 4319 4320 DIVIDENDS DIRECTORS’ SHAREHOLDINGS The following dividends were declared during the year under Details of the directors’ direct and indirect shareholdings in the review: Company are reflected on page 56. 2009 2008 There has been no change in directors’ shareholdings between R’000 R’000 the financial year-end and the date of this report. Ordinary dividend number 40 51,0 cents, declared 18 April 2007 – 54 603 SUBSIDIARIES Ordinary dividend number 41 Full details of subsidiaries are set out on page 54. 10,6 cents, declared 9 October 2007 – 11 385 The results of the subsidiaries, so far as concerns the Company, Ordinary dividend number 42 comprise aggregate income and losses for the year, after 28,0 cents, declared 11 April 2008 30 094 – taxation, of R16 506 000 (2008: R130 001 000) and R50 277 882 30 094 65 988 (2008: R1 559 000) respectively.

RESOLUTIONS AUDITOR No special resolutions were passed by the Company or its PricewaterhouseCoopers Inc. will continue in office in accordance subsidiaries during the current year. with section 270(2) of the Companies Act, 1973.

DIRECTORS AND SECRETARY SUBSEQUENT EVENTS The directors in office at the date of this report are: No fact or circumstance material to an appreciation of these financial statements has occurred between the financial year-end LCZ Cele (independent, non-executive) and the date of this report. MPD Conway JTM Edwards (independent, non-executive) Durban L Gadd (non-executive) 17 April 2009

CMH Annual Report 2009 23 Segment Information

2009 2008 TOTAL R’000 % R’000 %

Revenue 6 581 641 100 8 811 995 100 Operating profit 46 378 100 212 237 100 Net finance costs (33 295) 100 (45 472) 100 Profit before taxation 13 083 100 166 765 100 Total assets 1 968 287 100 2 247 845 100 Total liabilities 1 516 815 100 1 763 008 100 Number of employees 2 418 100 2 829 100 Expenditure on plant and equipment 33 945 100 35 458 100 Depreciation 24 766 100 24 296 100 Goodwill acquired 227 100 172 100 Goodwill impaired 21 572 100 10 400 100 Goodwill at year-end 123 001 100 144 346 100

2009 2008 RETAIL MOTOR R’000 % R’000 %

Revenue 6 065 942 92 8 132 421 92 Operating profit 42 347 91 163 797 77 Net finance costs (63 624) 191 (86 274) 190 Profit before taxation (21 277) (163) 77 523 46 Total assets 1 003 202 51 1 208 618 53 Total liabilities 739 542 49 848 495 48 Number of employees 2 005 83 2 386 84 Expenditure on plant and equipment 27 982 82 28 314 80 Depreciation 20 175 81 19 351 80 Goodwill acquired 227 100 –– Goodwill impaired 17 029 79 7 400 71 Goodwill at year-end 98 001 80 114 803 80

2009 2008 CAR HIRE R’000 % R’000 %

Revenue 258 509 4 219 789 2 Operating profit (1 020) (2) 9 790 4 Net finance costs 2 832 (9) (1 737) 4 Profit before taxation 1 812 14 8 053 5 Total assets 452 230 23 485 786 22 Total liabilities 466 579 31 513 978 29 Number of employees 293 12 278 10 Expenditure on plant and equipment 4 621 14 3 310 9 Depreciation 2 390 10 1 672 7 Goodwill acquired – – – – Goodwill impaired – – –– Goodwill at year-end ––––

24 CMH Annual Report 2009 2009 2008 MARINE AND LEISURE R’000 % R’000 %

Revenue 225 753 3 388 503 5 Operating profit (9 268) (20) 10 281 5 Net finance costs (582) 2 (7 913) 17 Profit before taxation (9 850) (75) 2 368 1 Total assets 121 698 6 157 356 7 Total liabilities 34 706 2 80 409 5 Number of employees 59 3 86 3 Expenditure on plant and equipment 839 2 3 403 10 Depreciation 1 748 7 2 867 12 Goodwill acquired – ––– Goodwill impaired 4 543 21 3 000 29 Goodwill at year-end 25 000 20 29 543 20

2009 2008 FINANCIAL SERVICES R’000 % R’000 %

Revenue 8 160 – 23 865 – Operating profit 7 866 17 24 584 12 Net finance costs 2 968 (9) 3 828 (8) Profit before taxation 10 834 83 28 412 17 Total assets 25 544 1 44 847 2 Total liabilities 19 475 1 33 977 2 Number of employees 3–3– Expenditure on plant and equipment ––18 – Depreciation 6–1 – Goodwill acquired –––– Goodwill impaired – ––– Goodwill at year-end – –––

2009 2008 CORPORATE SERVICES/OTHER R’000 % R’000 %

Revenue 23 277 – 47 417 1 Operating profit 6 453 14 3 785 2 Net finance costs 25 111 (75) 46 624 (103) Profit before taxation 31 564 241 50 409 30 Total assets 365 613 19 351 238 16 Total liabilities 256 513 17 286 149 16 Number of employees 58 2 76 3 Expenditure on plant and equipment 503 1 413 1 Depreciation 447 2 405 1 Goodwill acquired ––172 100 Goodwill impaired –––– Goodwill at year-end ––––

CMH Annual Report 2009 25 Balance Sheets at 28 February 2009

Group Company 2009 2008 2009 2008 Note R’000 R’000 R’000 R’000

ASSETS Non-current assets Plant and equipment 4 75 069 71 717 – – Goodwill 5 123 001 144 346 – – Investments 6 146 848 124 379 146 848 124 378 Deferred taxation 7 43 535 36 396 – 2 378 Investment in subsidiary 8 – – 165 801 294 963 388 453 376 838 312 649 421 719 Current assets Inventory 9 1 163 084 1 379 797 – – Trade and other receivables 10 196 335 261 370 – – Tax paid in advance 8 425 – – – Derivative financial assets 11 – 6 372 – – Cash and cash equivalents 12 211 990 223 468 172 949 2 095 1 579 834 1 871 007 172 949 2 095 Total assets 1 968 287 2 247 845 485 598 423 814

EQUITY AND LIABILITIES Capital and reserves Share capital 13 20 509 20 062 20 509 20 062 Share-based payment reserve 14 6 186 5 477 6 186 5 477 Non-distributable reserve 15 5 896 5 896 5 896 5 896 Retained earnings 419 314 441 281 451 164 392 817 Ordinary shareholders’ equity 451 905 472 716 483 755 424 252 Minority interest 16 (433) 12 121 – – Total equity 451 472 484 837 483 755 424 252 Non-current liabilities Advance from minority shareholders 16 224 792 252 317 – – Interest-bearing borrowings 17 3 670 5 314 – – Assurance funds 18 19 458 26 217 – – Lease liabilities 19 88 613 77 905 – – 336 533 361 753 – – Current liabilities Advance from associate company 6 – 47 – – Advance from minority shareholders 16 20 821 18 407 – – Interest-bearing borrowings 17 1 728 1 524 – – Trade and other payables 20 1 157 733 1 368 973 349 – Current tax liabilities – 12 304 1 494 (438) 1 180 282 1 401 255 1 843 (438) Total liabilities 1 516 815 1 763 008 1 843 (438) Total equity and liabilities 1 968 287 2 247 845 485 598 423 814

26 CMH Annual Report 2009 Income Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 Note R’000 R’000 R’000 R’000

Revenue 21 6 581 641 8 811 995 19 469 84 409 Cost of sales (5 483 271) (7 486 603) – – Gross profit 1 098 370 1 325 392 19 469 84 409 Other income 22 3 100 12 698 48 589 3 000 Impairment of goodwill 5 (21 572) (10 400) – – Selling and administration expenses (1 033 520) (1 115 453) (912) (1 143) Operating profit 46 378 212 237 67 146 86 266 Investment income 24 17 142 7 218 34 086 14 032 Finance costs 24 (50 437) (52 690) (24) – Profit before taxation 13 083 166 765 101 208 100 298 Taxation 25 (11 023) (54 857) (12 767) (4 127) Net profit 2 060 111 908 88 441 96 171 Attributable to: Equity holders of the Company 8 127 98 173 88 441 96 171 Minority interest (6 067) 13 735 – – 2 060 111 908 88 441 96 171

EARNINGS PER SHARE Basic (cents) 26 7,6 91,6 Diluted basic (cents) 26 7,6 89,7 Headline (cents) 26 24,6 97,7 Diluted headline (cents) 26 24,6 95,7

CMH Annual Report 2009 27 Statements of Changes in Equity for the year ended 28 February 2009

Attributable Non- Share- to equity distri- based holders Share butable payment Retained of the Minority Total capital reserve reserve earnings Company interest equity R’000 R’000 R’000 R’000 R’000 R’000 R’000

GROUP Balance at 28 February 2007 18 757 5 896 4 340 409 096 438 089 12 217 450 306 Issue of shares 1 305 1 305 1 305 Net profit 98 173 98 173 13 735 111 908 Share-based payment reserve 1 137 1 137 1 137 Dividends paid (65 988) (65 988) (13 594) (79 582) Purchase of minority interest (237) (237) Balance at 29 February 2008 20 062 5 896 5 477 441 281 472 716 12 121 484 837 Issue of shares 447 447 447 Net profit 8 127 8 127 (6 067) 2 060 Share-based payment reserve 709 709 709 Dividends paid (30 094) (30 094) (6 398) (36 492) Purchase of minority interest (89) (89) Balance at 28 February 2009 20 509 5 896 6 186 419 314 451 905 (433) 451 472

COMPANY Balance at 28 February 2007 18 757 5 896 4 340 362 634 391 627 Issue of shares 1 305 1 305 Net profit 96 171 96 171 Share-based payment reserve 1 137 1 137 Dividends paid (65 988) (65 988) Balance at 29 February 2008 20 062 5 896 5 477 392 817 424 252 Issue of shares 447 447 Net profit 88 441 88 441 Share-based payment reserve 709 709 Dividends paid (30 094) (30 094) Balance at 28 February 2009 20 509 5 896 6 186 451 164 483 755

28 CMH Annual Report 2009 Cash Flow Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 Note R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 6 642 852 8 814 882 19 469 84 409 Cash paid to suppliers and employees (6 471 789) (8 483 185) 146 (73)

Cash generated from operations 27 171 063 331 697 19 615 84 336 Investment income 24 17 142 7 218 34 086 14 032 Finance costs 24 (50 437) (52 690) (24) – Dividends paid 28 (30 094) (215 841) (30 094) (215 841) Taxation paid 29 (38 834) (106 709) (8 457) (28 248)

Net cash movement from operating activities 68 840 (36 325) 15 126 (145 721)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment (33 945) (35 458) – – Proceeds on disposal of plant and equipment 5 621 8 927 – – Investments (19 470) (15 378) (19 470) (15 378) Proceeds on disposal of subsidiaries 22.1 – – 45 589 – Proceeds on disposal of business 30 22 750 – – Purchase of minority interest 229 (576) – – Payment of goodwill (227) – – – Movement in investment in subsidiary – – 129 162 (71 074)

Net cash movement from investing activities (47 770) (41 735) 155 281 (86 452)

CASH FLOWS FROM FINANCING ACTIVITIES Advance from associate company (47) (23) – – Advance from minority 31 (31 508) (28 549) – – Proceeds of issue of shares 447 1 305 447 1 305 Interest-bearing loans (1 440) (1 718) – –

Net cash movement from financing activities (32 548) (28 985) 447 1 305

Net movement in cash and cash equivalents (11 478) (107 045) 170 854 (230 868) Cash and cash equivalents at beginning of year 223 468 330 513 2 095 232 963

Cash and cash equivalents at end of year 12 211 990 223 468 172 949 2 095

CMH Annual Report 2009 29 Notes to the Annual Financial Statements for the year ended 28 February 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of preparation The annual financial statements and consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies Act of South Africa. The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The policies set out below have been consistently applied to all the years presented unless otherwise stated.

Standards, amendments and interpretations effective in 2009 or early adopted by the Group No standards, amendments and interpretations which became effective for the year ended 28 February 2009 have an impact on the Group and no standards, amendments and interpretations not yet effective have been early adopted by the Group.

The following interpretations are mandatory for accounting periods beginning on or after 1 January 2008 but are not relevant to the Group’s operations:

• IFRIC 12, “Service Concession Arrangements”; and

• IFRIC 14, “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”.

1.2 Basis of consolidation Investment in subsidiaries Subsidiaries are those entities in which the Group has an interest of more than one-half of the voting rights or has the power to govern the financial and operating policies.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are included until the date on which control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets received, shares issued and liabilities undertaken at the date of acquisition, plus costs directly attributable to the acquisition. Identifiable assets acquired, and liabilities and contingent liabilities assumed, in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

The excess of the cost of the acquisition over the fair value of the net assets of the entity acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the entity acquired, the difference is recognised directly in the income statement.

All inter-group transactions and balances are eliminated.

The accounting policies of all subsidiaries are consistent with those of the Group.

The investment in subsidiaries is stated at cost less accumulated impairment.

Investments in associate companies Associate companies are entities in which the Group has between 20% and 50% of the voting rights, or over which the Group has significant influence, but does not control. Investments in associate companies are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associate companies includes goodwill (net of any accumulated impairment loss) on acquisition. Under the equity method, the Group’s share of the post-acquisition profits or losses of associate companies is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Unrealised gains on transactions between the Group and its associate companies are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. When the Group’s share of losses in an associate company equals or exceeds its interest in the associate, the Group does not recognise further losses unless the Group has incurred obligations, issued guarantees, or made payments on behalf of the associate companies.

The accounting policies of associates are consistent with those of the Group.

Minority interests and transactions with minority interests Minority interest is valued at the minorities’ portion of the acquiree’s identifiable assets, liabilities and contingent liabilities at the acquisition date plus the minorities’ portion of post-acquisition reserves.

Minority interest is included in equity on the balance sheet and is also reconciled in the statement of changes in equity.

30 CMH Annual Report 2009 The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains or losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

1.3 Foreign currency translation Functional and presentation currency Items included in the financial statements of each subsidiary are measured using the currency of the primary economic environment in which the subsidiary operates (the functional currency). The consolidated financial statements are presented in South African Rands, which is the Group’s functional and presentation currency.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement in the year in which they arise.

1.4 Plant and equipment Plant and equipment is recorded at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is provided using the straight-line method to write off the cost of the assets to their residual values over their estimated useful lives as follows:

plant and machinery 4 – 5 years furniture and office equipment 3 – 10 years motor vehicles 4 – 5 years leasehold improvements the period of the lease

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are recognised in the income statement within “selling and administration expenses”.

1.5 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets in the business combination at the date of acquisition. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Goodwill arising on business combinations prior to 1 March 2004 is carried at the net book value as at 1 March 2004 and is not amortised. Goodwill arising on business combinations on or after 1 March 2004 is initially reflected at its original cost and is not amortised. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

1.6 Financial assets The Group classifies its investments, loans and receivables as financial assets. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its assets at initial recognition. Financial assets are initially measured at fair value plus transaction costs. Subsequently they are measured at amortised cost less impairment losses, or reversals thereof, which are recognised in the income statement. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

CMH Annual Report 2009 31 Notes to the Annual Financial Statements for the year ended 28 February 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued 1.7 Derivative financial instruments Derivatives are initially recognised at fair value on the date the derivative contracts are entered into. Subsequently the derivatives are carried at fair value through profit or loss. Gains or losses arising from a change in the fair value of the derivatives are included in the income statement within “other income/expenses” in the period in which they arise.

1.8 Deferred taxation Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred taxation is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred taxation is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred taxation asset is realised or the deferred taxation liability is settled.

Deferred tax assets relating to income and dividend taxes are recognised to the extent that it is probable that future taxable profit or dividends paid will be available against which the temporary differences can be utilised.

1.9 Inventory Inventories are stated at the lower of cost and net realisable value, due recognition having been made for obsolescence and redundancy. Net realisable value is determined as set out in note 3.4. Cost includes all costs incurred that are necessary to bring the goods to saleable condition and location and is determined on the following basis:

New vehicles actual cost New marine craft actual cost Used and demonstration vehicles actual cost Used and demonstration marine craft actual cost Car hire fleet vehicles actual cost Parts and accessories weighted average cost Petrol, oils and other inventory actual cost

Vehicles and parts purchased, which are paid for within the short time periods provided for in the manufacturers’ standard franchise agreements, are recognised as inventory when received. This policy is applied despite the fact that certain agreements provide that ownership will remain vested in the manufacturer until the purchase price has been paid in full.

Car hire fleet vehicles are primarily used for periods of less than twelve months and, as such, are included in current assets.

1.10 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are impaired when there is objective evidence that the Group will not be able to collect all amounts owing according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the movement in the allowance for impairment is recognised in the income statement within “selling and administration expenses”.

1.11 Cash and cash equivalents Cash and cash equivalents comprise deposits held at call with banks, net of bank overdrafts, and balances held by insurance underwriters. These are reflected in the balance sheet and cash flow statement at cost. Bank overdrafts are reflected under current liabilities except where they are held at the same bank and branch as favourable balances and there is a legal right of set-off.

1.12 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

32 CMH Annual Report 2009 1.13 Financial liabilities The Group has the following financial liabilities:

Trade and other payables: these are initially measured at fair value less transaction costs and subsequently stated at amortised cost. Short-term payables are measured at original invoice amount.

Borrowings: these are measured initially at the fair value of proceeds received, net of transaction costs incurred, when the Group becomes party to the contractual provisions. Borrowings are subsequently stated at amortised cost, using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised as finance costs/investment income in the income statement over the period of the borrowings.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Financial liabilities are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled, or expires.

1.14 Employee benefits Pension The Group provides retirement benefits for its employees through a number of defined contribution plans. A defined contribution plan is a pension plan under which the Group pays a fixed contribution to a separate entity and has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to their employment service.

Payments to the retirement contribution plans are charged to the income statement as incurred.

Health care The Group provides health care benefits for its employees through contributions to various independent medical aid schemes. Payments to the medical aid schemes are charged to the income statement as incurred. The Group has no post- retirement obligations to employees.

Remuneration The cost of all short-term employee remuneration is recognised during the year in which the employee renders the related service. An accrual is made for employee entitlement to salary, bonuses, profit share and leave pay based on contractual obligations at current rates of remuneration.

Equity compensation plans Share options are granted to key employees. Options are granted at a discount varying between 0% and 20% of the market price of the shares on the date of the grant and are exercisable at that price. The options have a contractual service term of five years and may be exercised in tranches over the period. When the options are taken up the proceeds are credited to share capital. Costs incurred in administering the scheme are expensed as incurred. The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense. The total amount to be expensed rateably over the vesting period is determined by reference to the fair value of the options or shares determined at the grant date, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non- market vesting conditions are included in assumptions about the number of options that are expected to become exercisable or the number of shares that the employee will ultimately receive. This estimate is revised at each balance sheet date and the difference is charged or credited to the income statement, with a corresponding adjustment to equity. The proceeds received on exercise of the options, net of any directly attributable transaction costs, are credited to equity.

1.15 Provisions Provisions are recognised when the Group has a present or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be established.

The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre- tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

CMH Annual Report 2009 33 Notes to the Annual Financial Statements for the year ended 28 February 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued 1.16 Revenue recognition Group revenue comprises revenue from trading activities after deducting value-added tax, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and the risks and rewards of ownership have been transferred to the customer. The retail motor division eliminates revenue arising from the sale of pre-owned vehicles to the wholesale motor trade. Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of business. Due to the short time frame of car hire and workshop contracts, generally two days, revenue from the rendering of services is not recognised until the contract has been completed.

Interest income is recognised as it accrues, taking into account the effective yield on the asset.

Dividends are recognised when the right to receive payment is established.

1.17 Dividends paid Dividends paid are recorded in the financial statements during the period in which they are approved by the board of directors and ratified by shareholders.

1.18 Segment reporting The various business segments of the Group are each subject to risks and returns that are different from other business segments. The principal business segments identified within the Group are retail motor, car hire, marine and leisure, and financial services. The corporate services segment provides management support and expertise for the business segments.

Segment assets, liabilities, revenue and expenditure are those directly attributable to the segment. Transfers between segments are accounted for at competitive market prices and, where significant, are eliminated on consolidation.

No secondary segment information on a geographical basis is provided as the Group operates in the Republic of South Africa only.

1.19 Assurance activities Underwriting results are determined on an annual basis in accordance with generally accepted practice for short-term insurers. The principle applied is that the costs of incurred claims, commission and related expenditure are applied against the earned proportion of premiums received, as follows:

– claims incurred comprise claims and related expenditure paid in the year and changes in the provision for outstanding claims incurred but not reported;

– commission paid is expensed in the year during which it is incurred;

– premiums written relate to business written during the year, together with premiums written in prior years and not yet taken to income; and

– unearned premiums represent that portion of the premiums that relates to unexpired terms of the insurance policies, calculated on a time proportionate basis.

1.20 Operating leases Operating leases are those where substantially all the risks and rewards of ownership are retained by the lessor. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Penalties payable on cancellation of leases are charged to the income statement in the period in which the penalties become payable.

1.21 Finance leases The Group leases certain vehicles. Leases of vehicles where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised when the lease commences, at the lower of the fair value of the leased asset and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding lease obligations, net of finance charges, are included in “trade and other payables”. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The vehicles acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

34 CMH Annual Report 2009 2. FINANCIAL RISK MANAGEMENT The Group’s activities expose it to a variety of financial risks. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by the chief executive officer and financial director under policies approved by the board of directors. They identify, evaluate and hedge financial risks in close co-operation with the Group’s operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments, and the investment of excess liquidity.

2.1 Interest rate risk Interest rate exposures are reviewed regularly. The Group is exposed to interest rate risk on its investments and borrowing facilities, all of which are linked to the prime overdraft rate.

Had interest rates for the year been 0,5 percentage point higher or lower and been applied to the interest-bearing debt and investments at year-end, the profit before taxation for the year would have been lower or higher by R1 688 000 (2008: R1 850 000) on the assumption that all other factors remained constant.

2.2 Foreign currency risk The Group has no significant foreign currency risk. The balances arising on material transactions denominated in foreign currencies are immediately hedged through the use of forward exchange contracts. At 28 February 2009, the Group had no accounts receivable denominated in foreign currency (2008: nil), and had trade payables to the value of US$560 409 (2008: US$6 700 000). Of this, US$nil (2008: US$6 455 000) was hedged through the use of forward exchange contracts. These trade payables and forward exchange contracts will be settled within the next 12 months.

2.3 Credit risk The Group’s credit risk lies principally in its trade receivables. These comprise a large, wide-spread customer base and regular credit assessments of customers are conducted. All amounts receivable are subject to the Group’s standard credit terms and are due within a maximum of 30 days after sale. There are no significant concentrations of credit risk.

Cash and cash equivalents are placed only with major financial institutions with secure credit ratings.

2.4 Equity price risk The Group has no direct exposure to any equity price risk.

2.5 Liquidity risk The Group manages its liquidity risk by regularly monitoring its projected cash flow requirements against its cash resources and unutilised borrowing facilities. At year-end the Group’s position was as follows:

2009 2008 R’000 R’000

Cash resources, excluding those held by insurance underwriters 186 766 178 667 Unutilised banking facilities 40 000 65 000 Total available resources 226 766 243 667

In terms of its articles of association the Company has unlimited borrowing powers.

The expected maturity of all significant financial liabilities is disclosed in the relevant notes to the financial statements.

2.6 Capital risk management The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

CMH Annual Report 2009 35 Notes to the Annual Financial Statements for the year ended 28 February 2009

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES 3.1 The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates will, by definition, rarely equal the actual results achieved. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

3.2 Impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1.5. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations use projections based on financial budgets approved by management.

The value-in-use calculation uses estimates and assumptions made by management. Management determines budgeted operating profit based on past performance and future expectations. The weighted average growth rates are consistent with the forecasts used in industry reports. The discount rates used reflect specific risks relating to the relevant cash- generating units.

3.3 Valuation of derivative financial instruments The valuation of derivative financial instruments is based on the market situation at the balance sheet date. The value of these derivative instruments fluctuates on a daily basis and the actual amounts realised may differ materially from the value at which they are reflected on the balance sheet (refer to note 1.7).

3.4 Determination of net realisable value of inventory Net realisable value is the estimate of the selling price of inventory in the ordinary course of business, less applicable variable selling expenses. Management is required to exercise judgement in the determination of this estimate, specifically relating to the forecasting of demand and inventory pricing (refer to note 1.9).

3.5 Accounting for investments in special purpose entities The Group has applied SIC 12, “Consolidation – Special Purpose Entities” in determining whether to consolidate its investment in Main Street 445 (Pty) Limited. The Group has not consolidated Main Street 445 (Pty) Limited on the basis that it has determined that the Group does not have rights to obtain the majority of the benefits of Main Street 445 (Pty) Limited, nor does it retain the majority of the residual or ownership risks related to the company in order to obtain benefits from its activities.

36 CMH Annual Report 2009 4. PLANT AND EQUIPMENT 4.1 Details of plant and equipment are: Leasehold Furniture improve- Plant and and office Motor Total ments machinery equipment vehicles R’000 R’000 R’000 R’000 R’000

GROUP At 28 February 2009 Cost 156 560 17 360 42 121 86 554 10 525 Accumulated depreciation (81 491) (3 538) (21 926) (50 742) (5 285)

Net book value 75 069 13 822 20 195 35 812 5 240

At 29 February 2008 Cost 141 405 13 730 36 599 80 487 10 589 Accumulated depreciation (69 688) (2 285) (19 158) (42 937) (5 308)

Net book value 71 717 11 445 17 441 37 550 5 281

COMPANY Nil

4.2 Reconciliation of movement GROUP Net book value – 28 February 2007 69 441 9 632 16 377 37 576 5 856 Additions 35 458 7 154 7 693 17 939 2 672 Disposals (8 886) (3 752) (677) (3 179) (1 278) Depreciation charge (24 296) (1 589) (5 952) (14 786) (1 969)

Net book value – 29 February 2008 71 717 11 445 17 441 37 550 5 281 Additions 33 945 5 406 10 469 15 302 2 768 Disposals (5 827) (1 100) (1 514) (2 443) (770) Depreciation charge (24 766) (1 929) (6 201) (14 597) (2 039)

Net book value – 28 February 2009 75 069 13 822 20 195 35 812 5 240

4.3 The insurance replacement value of plant and equipment excluding motor vehicles is R131 803 000 (2008: R131 803 000).

4.4 R32 000 000 (2008: R30 000 000) has been budgeted and authorised for capital expenditure in respect of the replacement of plant and equipment. No portion of this was committed at year-end. This amount will be financed from existing cash resources.

4.5 Depreciation is recognised in the income statement within “selling and administration expenses”.

CMH Annual Report 2009 37 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group 2009 2008 R’000 R’000

5. GOODWILL 5.1 Cost 155 473 155 246 Accumulated impairment (32 472) (10 900)

Net book value at end of year 123 001 144 346

5.2 Net book value at beginning of year 144 346 154 574 Amounts paid during year 227 172 Amounts impaired during year (21 572) (10 400)

Net book value at end of year 123 001 144 346

5.3 Amounts impaired during the year arose as a result of: – pending closure of branches 227 7 400 – application of impairment test as set out below 21 345 3 000

21 572 10 400

5.4 Goodwill acquired through business combinations has been attributed to individual cash-generating units (“CGUs”). The carrying value of goodwill is subject to annual impairment testing using the value-in-use method.

Detailed operating budgets for the 2010 year formed the basis of projected cash flows. In respect of the CGUs with attributable goodwill, the budgets contained little or no sales volume growth, with expected improved cash flows arising from reduced operating expenses and working capital requirements. In respect of the forecast period after year one, growth of 5% per annum was predicted, and a discount rate of 15% applied.

On this basis, the value-in-use calculations indicated that goodwill exceeded the calculated value and an impairment charge of R21 345 000 was processed at 28 February 2009.

The cash flows were stress-tested by adversely amending the parameters listed above. Neither parameter change had a material impact on the outcomes.

5.5 Amounts impaired are shown separately on the face of the income statement.

38 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

6. INVESTMENTS 6.1 Main Street 445 (Pty) Limited Cost at acquisition 124 387 124 387 124 387 124 387

Impairment recognised on acquisition (21 409) (21 409) (21 409) (21 409) Reversal recognised – Prior year 3 000 – 3 000 – – Current year 3 000 3 000 3 000 3 000

(15 409) (18 409) (15 409) (18 409)

Dividends accrued – Prior years 18 400 3 022 18 400 3 022 – Current year 19 470 15 378 19 470 15 378

37 870 18 400 37 870 18 400

Amortised cost at end of year 146 848 124 378 146 848 124 378

The investment in Main Street 445 (Pty) Limited comprises 124 387 “C” redeemable cumulative preference shares of R0,00001 each issued at a premium of R999,99999 each. The preference shares accrue a semi-annual dividend providing a dividend yield to the holder on the unredeemed capital and accrued dividends equivalent to 85% of the prime overdraft rate.

6.2 Investment in associate company

Share of equity of associate company At beginning of year 1 1 – – Sold during year (1) – – –

At end of year – 1 – –

The investment comprised:

Cost of shares – Thebe- (Pty) Limited – 1 – –

– 1 – –

The investment represented a 49,5% share in Thebe- National Car Rental (Pty) Limited, a company incorporated in the Republic of South Africa. The company was deregistered during the year.

Total investments 146 848 124 379 146 848 124 378

6.3 Advance from associate company – 47 – –

CMH Annual Report 2009 39 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

7. DEFERRED TAXATION 7.1 Balance at beginning of year 36 396 32 296 2 378 –

Movements during year:

Effect of change in rate – (1 104) – – Temporary differences – income taxation 10 143 2 135 – – – secondary taxation on companies (3 004) 3 069 (2 378) 2 378

Balance at end of year 43 535 36 396 – 2 378

7.2 Balance at end of year comprises:

Impairment of receivables 2 394 2 219 – – Lease liabilities 24 812 21 814 – – Taxation allowances (2 720) (6 116) – – Receipts in advance 1 953 4 405 – – Accruals and provisions 7 760 12 164 – – Secondary taxation on companies 337 3 341 – 2 378 Assessed losses 9 042 616 – – Prepayments (43) (868) – – Derivative financial assets – (1 179) – –

43 535 36 396 – 2 378

7.3 The movement on the deferred taxation account was as follows:

Closing balance Income statement Closing balance Income statement Closing balance 28 February movement 29 February movement 28 February 2009 2009 2008 2008 2007 R’000 R’000 R’000 R’000 R’000

Impairment of receivables 2 394 175 2 219 354 1 865 Lease liabilities 24 812 2 998 21 814 3 402 18 412 Taxation allowances (2 720) 3 396 (6 116) 669 (6 785) Accruals and provisions 7 760 (4 404) 12 164 518 11 646 Secondary taxation 337 (3 004) 3 341 3 069 272 Assessed losses 9 042 8 426 616 404 212 Receipts in advance 1 953 (2 452) 4 405 (2 269) 6 674 Prepayments (43) 825 (868) (868) – Derivative financial assets – 1 179 (1 179) (1 179) –

Total 43 535 7 139 36 396 4 100 32 296

7.4 Assessed losses to the extent of R9 950 000 (2008: Nil) have not been recognised for deferred taxation purposes as it is not probable that future taxable profit will be earned in the subsidiaries concerned.

40 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

8. INVESTMENT IN SUBSIDIARY 8.1 Shares, at cost less amounts impaired 1 1

Amount owing by subsidiary 165 800 294 962

165 801 294 963

8.2 Financial information in respect of Group subsidiaries is stated on page 54.

8.3 The amount owing by subsidiary is unsecured, earns interest at 2% above the prime overdraft rate and has no fixed repayment terms. Of the prior year balance, R155 820 000 earned interest at 2% above the prime overdraft rate and the balance was interest-free.

8.4 Costs of impairment of investments in subsidiaries are charged to the income statement under the heading “selling and administration expenses”.

8.5 Directors’ valuation of investment in subsidiaries – R165 800 000 (2008: R864 608 000).

9. INVENTORY 9.1 Inventory has been valued as stated in note 1.9 and comprises:

– new vehicles 318 628 353 453 – new marine craft 65 423 77 560 – used and demonstration vehicles 315 258 423 181 – used and demonstration marine craft 6 032 13 694 – car hire fleet vehicles 405 135 458 485 – parts and accessories 45 138 44 342 – petrol, oils and other inventory 7 470 9 082

1 163 084 1 379 797

9.2 Inventory of new, demonstration and car hire fleet vehicles valued at R848 214 000 (2008: R837 046 000) forms security for trade payables aggregating R966 925 000 (2008: R1 062 373 000).

9.3 The cost of inventory sold during the year is recognised as an expense and charged to “cost of sales” in the income statement.

9.4 Certain car hire fleet and demonstration vehicles are subject to finance leases. These leases all mature within 12 months. Because of the nature of the business and the short period of the leases, the leased vehicles are reflected as inventory and the corresponding liability is included under trade payables.

CMH Annual Report 2009 41 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

10. TRADE AND OTHER RECEIVABLES 10.1 Trade receivables 149 825 211 036 Less: impairment (8 550) (7 926)

141 275 203 110 Other receivables 55 060 58 260

196 335 261 370

10.2 Trade receivables are primarily in respect of vehicle, car hire, parts and workshop sales. These amounts are subject to the Group’s standard credit terms and are due within a maximum of 30 days after year-end. No interest is charged on these accounts and there are no significant concentrations of credit risk.

10.3 The carrying value of trade and other receivables approximates their fair value.

10.4 Trade receivables can be analysed as follows:

Neither overdue nor impaired 111 700 167 963

Past due but not impaired at year-end Overdue by less than 60 days 21 236 28 831

Past due and impaired at year-end 16 889 14 242 Impairment against these debtors (8 550) (7 926)

Carrying value at year-end 8 339 6 316

Total 141 275 203 110

10.5 The movement in the allowance for impairment is as follows:

At beginning of year 7 926 6 433 Written off during year (4 021) (2 795) Increase in impairment 4 645 4 288

At end of year 8 550 7 926

10.6 The impairment charge for bad and doubtful debts for the year has been included under “selling and administration expenses” in the income statement.

11. DERIVATIVE FINANCIAL ASSETS Forward foreign exchange contracts – 6 372 – –

12. CASH AND CASH EQUIVALENTS Bank balances, net of overdrafts 186 766 178 667 172 949 2 095 Held by insurance underwriters in short-term money market instruments 25 224 44 801 – –

211 990 223 468 172 949 2 095

The effective interest rate on bank balances was 11%.

42 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

13. SHARE CAPITAL 13.1 Preference share capital Authorised 1 032 400 7,5% “C” redeemable cumulative preference shares of R1 each.

Issued Nil shares.

13.2 Ordinary share capital Authorised 143 590 560 ordinary shares of no par value.

Issued At beginning of year – 107 405 000 shares 20 062 18 757 20 062 18 757 During year – 105 000 (2008: 367 300) shares 447 1 305 447 1 305

At end of year – 107 510 000 shares 20 509 20 062 20 509 20 062

13.3 The unissued shares are under the control of the directors until the forthcoming annual general meeting in terms of section 221 of the Companies Act.

13.4 During 2001 shareholders approved the introduction of an employee share incentive scheme. In terms of the scheme 20% of the Company’s issued shares, less those shares that are subject to the terms and conditions of the Combined Motor Holdings Limited Share Trust, were made available to issue to employees as option shares. Share options which have been granted to date, and which vest in tranches over a five-year period of employment, net of options which have matured and been exercised, are as follows (‘000 shares):

– February 2002 at R2,00 per share 10 10 10 10 – July 2002 at R2,10 per share 100 130 100 130 – October 2002 at R2,06 per share 50 50 50 50 – October 2004 at R5,12 per share 3 665 3 740 3 665 3 740

3 825 3 930 3 825 3 930

13.5 Details of the share options are (’000 shares):

Granted at beginning of year 3 930 4 297 3 930 4 297 Granted during year – – – – Forfeited during year – – – – Taken up during year (105) (367) (105) (367)

Granted at end of year 3 825 3 930 3 825 3 930

CMH Annual Report 2009 43 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

14. SHARE-BASED PAYMENT RESERVE 14.1 During October 2004, the Group granted 12 employees the option to acquire a total of 4 350 000 shares at R5,12 per share. All the options were exercised immediately but will only vest in the employees in tranches over a five-year period of employment.

14.2 A reconciliation of the movement in the number of share options is as follows (‘000 shares):

Outstanding at beginning of year 3 740 3 920 3 740 3 920 Taken up during year (75) (180) (75) (180)

Outstanding at end of year 3 665 3 740 3 665 3 740

14.3 The amounts recognised in the financial statements for share-based payment transactions are as follows (‘000 shares):

Balance at beginning of year 5 477 4 340 5 477 4 340 Charged as “selling and administration expenses” during year 709 1 137 709 1 137

Balance at end of year 6 186 5 477 6 186 5 477

14.4 The Group has used a Black-Scholes model to value the cost of the options. The model used the following parameters:

– risk-free rate 9,5% – annualised volatility 41,0% – dividend yield 5,1% – vesting period 10% after two years 20% after three years 30% after four years 40% after five years – fair value per share option at grant date R1,82 – expected departures at vesting date 18%

14.5 The total cost of the options, as reflected by the model, is R6 449 000, which is charged to the income statement as follows:

R’000

– 2005 682 – 2006 1 638 – 2007 2 020 – 2008 1 137 – 2009 709 – 2010 263

6 449

44 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

15. NON-DISTRIBUTABLE RESERVE Capital redemption reserve 5 896 5 896 5 896 5 896

16. MINORITY INTEREST 16.1 Advance from minority shareholders Non-current portion 224 792 252 317 Current portion 20 821 18 407

245 613 270 724 Share of equity in subsidiaries (433) 12 121

245 180 282 845

16.2 The advance from minority shareholders is interest- free and has no fixed terms of repayment. However, it is expected to be repaid as follows:

Next 12 months 20 821 18 407 Years 2 – 5 99 505 104 331 Years 6+ 125 287 147 986

245 613 270 724

The carrying value of the borrowings approximates their fair value.

17. INTEREST-BEARING BORROWINGS 17.1 Interest-bearing borrowings Non-current portion 3 670 5 314 Current portion 1 728 1 524

5 398 6 838

17.2 This advance is unsecured, bears interest at 1% below the prime overdraft rate and is repayable in 31 equal instalments of R209 000, including interest, as follows:

Next 12 months 1 728 1 524 Years 2 – 5 3 670 5 314

5 398 6 838

The carrying value of the borrowings approximates their fair value.

CMH Annual Report 2009 45 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

18. ASSURANCE FUNDS Underwriting activities are conducted through special purpose entities on commercial terms and conditions and at market rates.

Income statement effect – gross written premium 2 714 19 356 – investment income 3 090 3 811 – decrease in unearned premium 5 208 3 974 – claims paid (3 718) (4 211) – other expenses (4 209) (10 626) – profit before taxation 3 085 12 304

Reflected in the balance sheet as:

– assurance funds (19 458) (26 217) – trade and other receivables 360 40 – cash and cash equivalents 25 224 44 801 – trade and other payables (1 528) (13 013)

19. LEASE LIABILITIES At beginning of year 77 905 63 491 Movement during year 10 708 14 414 At end of year 88 613 77 905

This liability arose as a result of the implementation of the “straight-line” concept contained in IAS 17, “Leases”.

20. TRADE AND OTHER PAYABLES 20.1 Trade payables 1 059 949 1 252 186 – – Accrued expenses 93 585 112 593 349 – Provisions 4 199 4 194 – – 1 157 733 1 368 973 349 –

20.2 Trade and other payables comprise primarily trade payables in respect of the purchase of vehicles and parts. They are due within periods varying between 30 and 180 days.

20.3 All payables are interest-free except those in respect of vehicle purchases and car hire fleet vehicles which bear interest at rates varying between 13,5% and 15,0% (2008: 12,0% and 14,0%) per annum for the period they are outstanding in excess of an initial interest-free period.

20.4 Included in trade payables are foreign creditors denominated in US$ to the value of US$560 409 (2008: US$6 700 000). Had the South African Rand been 5% weaker or stronger against the US Dollar at year-end, the profit before taxation for the year would have been lower or higher by R280 000 (2008: R2 535 000).

Vehicle Onerous Total warranty contracts R’000 R’000 R’000

20.5 Movement in provisions:

At 29 February 2008 4 194 4 194 – Created during year 3 714 1 936 1 778 Utilised during year (3 709) (3 709) –

At 28 February 2009 4 199 2 421 1 778

46 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

21. REVENUE Revenue is derived from the various segments of the business as follows:

Retail motor 6 065 942 8 132 421 – – Car hire 258 509 219 789 – – Marine and leisure 225 753 388 503 – – Financial services 8 160 23 865 – – Corporate services/other 23 277 47 417 19 469 84 409

6 581 641 8 811 995 19 469 84 409

22. OTHER INCOME Capital profit on disposal of subsidiaries (note 22.1) – – 45 589 – Capital profit on disposal of business (note 30) 100 750 – – Capital profit on lease termination – 2 000 – – Investment impairment reversed (note 6) 3 000 3 000 3 000 3 000 Valuation of derivative financial assets – 6 948 – –

3 100 12 698 48 589 3 000

22.1 Capital profit on disposal of subsidiaries – – 45 589 – During October 2006, the Company sold its interests in subsidiaries to a newly-formed subsidiary, CMH Holdings (Proprietary) Limited. The sale, on loan account, is classified as a “common control” transaction in terms of IFRS 3 – Business Combinations, and, as such, the capital profit arising cannot be recognised until such time as the loan account is repaid. The capital profit recorded in the current year represents the extent to which the loan account was repaid. The profit is eliminated in the consolidated annual financial statements.

23. EXPENSES BY NATURE Cost of sales and other costs 5 877 413 7 930 265 168 6 Employee benefit expense (note 23.1) 431 797 467 584 709 1 137 Depreciation 24 766 24 296 – – Auditor’s remuneration (note 23.2) 3 925 4 185 36 – Operating lease charges 179 060 169 845 – – Impairment charge for bad and doubtful debts 4 645 4 288 – – Foreign exchange (gains)/losses (4 815) 1 593 – – Impairment of goodwill 21 572 10 400 – –

6 538 363 8 612 456 913 1 143

Classified as:

Cost of sales 5 483 271 7 486 603 – – Impairment of goodwill 21 572 10 400 – – Selling and administration expenses 1 033 520 1 115 453 913 1 143

6 538 363 8 612 456 913 1 143

CMH Annual Report 2009 47 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

23. EXPENSES BY NATURE continued 23.1 Employee benefit expense Employee costs 388 269 420 847 – – Pension fund contributions 24 779 26 901 – – Medical aid contributions 18 040 18 699 – – Share-based payment expense 709 1 137 709 1 137

431 797 467 584 709 1 137

23.2 Auditor’s remuneration Fees for audit 3 733 3 320 22 – Fees for other services 89 61 – – Prior year adjustment 103 804 14 –

3 925 4 185 36 –

24. INVESTMENT INCOME / FINANCE COSTS Interest paid – trade payables (50 437) (52 690) (24) –

Interest received – bank 17 142 7 218 10 456 1 323 – subsidiaries – – 23 630 12 709 17 142 7 218 34 086 14 032

Net finance cost (33 295) (45 472) 34 062 14 032

25. TAXATION 25.1 South African normal taxation:

– current year 16 736 47 863 9 480 4 068 – prior year adjustment 267 (226) 278 (155) – deferred – current year (10 143) (2 135) – – – change in rate – 1 104 – – – capital gains taxation 14 109 – –

Secondary taxation on companies – current 1 145 11 211 631 2 592 – deferred 3 004 (3 069) 2 378 (2 378)

11 023 54 857 12 767 4 127

% % % %

25.2 Reconciliation of rate of taxation Statutory rate 28,0 29,0 28,0 29,0

Adjusted for: Disallowable expenditure 49,6 2,0 – 0,3 Exempt income and allowances (48,3) (4,1) (18,7) (25,3) Secondary taxation on companies – current 8,7 6,7 0,6 2,6 – deferred 22,8 (1,8) 2,4 (2,4) Assessed losses not recognised 21,3 0,4 – – Capital gains taxation 0,1 0,1 – – Change in rate – 0,7 – – Prior year adjustment 2,0 (0,1) 0,3 (0,1)

Effective rate 84,2 32,9 12,6 4,1

48 CMH Annual Report 2009 Group 2009 2008 R’000 R’000

26. EARNINGS PER SHARE 26.1 Basic earnings and headline earnings per share are based on attributable net profit and headline earnings respectively and calculated using the weighted average of 107 469 932 (2008: 107 194 534) shares in issue during the year.

26.2 On the assumption that all of the share options referred to in note 13.4 are taken up by employees, the earnings and headline earnings per share will be diluted.

The number of shares used to calculate the diluted earnings and headline earnings per share is determined by adding to the existing shares in issue the number of shares that could have been purchased using the value representing the discount between the price at which the option shares were granted and the year-end value of the existing shares. No adjustment is made to net profit or headline earnings.

Weighted average number of shares in issue during the year (‘000 shares) 107 470 107 195 Adjustment for option shares – 2 230

Weighted average number of shares for dilution calculation 107 470 109 425

26.3 Reconciliation of headline earnings Net profit 2 060 111 908

Non-trading items – capital profit on disposal of business (100) (750) – capital profit on lease termination – (2 000) – less: capital gains taxation 14 109

(86) (2 641)

– impairment of goodwill 21 572 10 400

Headline earnings 23 546 119 667

Attributable to:

Equity holders of the Company 26 390 104 768 Minority shareholders (2 844) 14 899

23 546 119 667

CMH Annual Report 2009 49 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

27. CASH GENERATED FROM OPERATIONS Operating profit 46 378 212 237 67 146 86 266

Adjustments for:

Movement in lease liabilities 10 708 14 414 – – Movement in share-based payment reserve 709 1 137 709 1 137 Depreciation 24 766 24 296 – – Movement in provisions 5 4 194 – – Capital profit on disposal of business (100) (750) – – Capital profit on disposal of subsidiaries – – (45 589) – Loss/(profit) on disposal of plant and equipment 195 (40) – – Investment impairment reversed (3 000) (3 000) (3 000) (3 000) Impairment of goodwill 21 572 10 400 – – Assurance funds movement (6 759) (11 452) – – Valuation of derivative financial assets 6 372 (6 948) – –

100 846 244 488 19 266 84 403

Working capital changes, excluding the effects of acquisitions and disposals:

Inventory 216 713 29 115 – – Trade and other receivables 64 684 8 058 – – Trade and other payables (211 180) 50 036 349 (67)

70 217 87 209 349 (67)

Cash generated from operations 171 063 331 697 19 615 84 336

28. DIVIDENDS PAID Amounts outstanding at beginning of year – (149 853) – (149 853) Ordinary dividends: – dividend number 42 (30 094) (54 603) (30 094) (54 603) – dividend number 41 – (11 385) – (11 385)

(30 094) (215 841) (30 094) (215 841)

29. TAXATION PAID Taxation paid is reconciled to the amounts disclosed in the income statement as follows:

Amounts unpaid at beginning of year (12 304) (60 056) 438 (21 305) Liability disposed of 57 – – – Amounts charged to the income statement (18 162) (58 957) (10 389) (6 505) Amounts (paid in advance)/unpaid at end of year (8 425) 12 304 1 494 (438)

(38 834) (106 709) (8 457) (28 248)

50 CMH Annual Report 2009 Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

30. PROCEEDS ON DISPOSAL OF BUSINESS On 28 February 2009, the Group disposed of its 50% interest in Princess Yachts SA (Proprietary) Limited to a third party.

Carrying value at the date of disposal of the assets (excluding cash and cash equivalents) and liabilities disposed of:

– Plant and equipment 11 – – Trade and other receivables 351 – – Trade and other payables (65) – – Current tax liability (57) – – Minority shareholder’s interest (318) –

Net asset value of business (78) – Capital profit 100 750

Proceeds on disposal of business 22 750

31. ADVANCE FROM MINORITIES Repayment of loans (26 110) (14 955) – – Payment of dividends (5 398) (13 594) – –

(31 508) (28 549) – –

32. RELATED PARTY TRANSACTIONS 32.1 During the year a number of subsidiary companies occupied properties which are owned directly or indirectly by various directors of the Company.

Rentals paid during the year amounted to 41 610 35 835 – –

The directors are of the opinion that the terms and conditions of the rental agreements approximate those available in the open market.

32.2 Transactions conducted with subsidiary companies during the year were as follows:

Dividends received (19 469) (84 409) Interest received (23 630) (12 709) Year-end balances – owing by subsidiary 165 800 294 962

CMH Annual Report 2009 51 Notes to the Annual Financial Statements for the year ended 28 February 2009

Group Company 2009 2008 2009 2008 R’000 R’000 R’000 R’000

33. COMMITMENTS Operating lease commitments. The future minimum lease payments under non-cancellable operating leases are as follows:

Next 12 months 144 810 119 863 – – Years 2 – 5 498 059 386 328 – – Years 6+ 440 160 308 927 – –

1 083 029 815 118 – – Less: accrued in balance sheet (88 613) (77 905) – –

Future expense 994 416 737 213 – –

34. EMPLOYEE BENEFIT INFORMATION 34.1 Membership of motor-related union pension funds is compulsory for certain artisans and other employees, whilst membership of the Group pension fund, Combined Motor Holdings Pension Fund, is available for all other classes of employees commencing employment before the age of 55 years.

34.2 During the year under review the Combined Motor Holdings Pension Fund operated as a defined contribution plan governed by the Pension Funds Act.

34.3 The Group pays a fixed monthly contribution to these separate legal entities and has no legal or constructive obligation to pay further contributions if the funds do not hold sufficient assets to pay all employees the benefits relating to their employment service.

34.4 The Group pays a fixed monthly contribution to various independent medical schemes. It has no post-retirement obligations to employees.

35. CONTINGENT LIABILITIES In support of the BEE transaction concluded with Thebe Investment Corporation (Proprietary) Limited, the Company has given certain undertakings on the occurrence of an event of default under the terms and conditions of the A-class and B-class preference shares in Main Street 445 (Proprietary) Limited:

35.1 To the holders of the A-class preference shares, to the value of R83 650 000 (2008: R102 739 000), the right to convert the shares to shares in the Company on a fair market value swop ratio; and

35.2 To the holders of the B-class preference shares, to the value of R19 736 000 (2008: R24 126 000), the right to put the shares to the Company for an amount equal to the outstanding capital and accumulated dividends.

All preference shares have been serviced and redeemed in accordance with the pre-determined schedule, and the directors are of the opinion that no material loss will arise as the result of these undertakings.

52 CMH Annual Report 2009 36. STANDARDS, AMENDMENTS AND INTERPRETATIONS OF EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN EARLY ADOPTED BY THE GROUP The following interpretations to existing standards have been published that are mandatory for the Group’s future accounting periods but that the Group has not early adopted:

– IAS 1 (Revised), “Presentation of Financial Statements” (effective for periods beginning on or after 1 January 2009)

The revised standard prescribes the basis for presentation of general purpose financial statements and sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. The Group will apply IAS 1 (Revised) from 1 March 2009. The Group assessed the impact of IAS 1 and concluded that it will only affect the format and extent of disclosures presented.

– IFRS Amendments “Improvements to IFRS” (effective for periods beginning on or after 1 January 2009)

This is a collection of amendments to IFRSs. These amendments are the result of conclusions the IASB reached on proposals made in its annual improvements project. The annual improvements project provides a vehicle for making non-urgent but necessary amendments to IFRSs. The only amendment which is relevant to the Group is the amendment to IAS16, “Property, Plant and Equipment”. The amendment requires vehicles held for hire to be included in plant and equipment and depreciated to their residual values over the expected period of use. The Group will apply IAS 16 (Revised) from 1 March 2009. The Group assessed the impact of IAS 16 and concluded that it will only affect the format and extent of disclosures presented.

– IAS 39 (Amendment), “Financial Instruments: Recognition and Measurement” and IFRS 7 (Amendment), “Financial Instruments: Disclosures – Reclassification of Financial Assets” (effective for periods beginning on or after 1 July 2008)

The amendments allow for reclassification of financial assets previously classified as “held for trading” or “available for sale”, subject to meeting certain requirements. A reclassification requires various disclosures as set out in the amendments. Derivatives and assets designated as “at fair value through profit or loss” under the fair value option are not eligible for reclassification. The Group assessed the impact of IAS 39 and concluded that it will have an insignificant impact on the results of the Group.

– IFRS 8, “Operating Segments” (effective for periods beginning on or after 1 January 2009)

IFRS 8 sets out requirements for disclosure of information about an entity’s operating segments and also about the entity’s products and services, the geographical area in which it operates, and its major customers. The Group assessed the impact of IFRS 8 and concluded that this will only impact the format and extent of disclosures presented. The Group will apply IFRS 8 from 1 March 2009.

– IFRIC 13, “Customer Loyalty Programmes” (effective for periods beginning on or after 1 July 2008)

IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive, the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. The Group will apply IFRS 8 from 1 March 2009.

37. INTERPRETATIONS TO EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE AND NOT RELEVANT FOR THE GROUP’S OPERATIONS The following standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accounting periods beginning on 1 March 2009 but are not relevant to the Group’s operations. Unless otherwise stated, they are effective for periods beginning on or after 1 January 2009:

– IFRS 2 (Amendment), “Share-based payment: Vesting Conditions and Cancellations” – IFRS 3 “Business Combinations” (effective for periods beginning on or after 1 July 2009) – IAS 1 (Amendment), “Presentation of Financial Instruments – Puttable Financial Instruments and Obligations Arising on Liquidation” – IAS 23 (Amendment), “Borrowing Costs” – IAS 27 “Consolidated and Separate Financial Statements” (effective for periods beginning on or after 1 July 2009) – IAS 32 (Amendment), “Financial Instruments: Presentation and Disclosure” – IAS 39 (Amendment), “Financial Instruments: Recognition and Measurement – Exposures Qualifying for Hedge Accounting” – IFRIC 15 “Agreements for the Construction of Real Estate” – IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” – IFRIC 17 “Distributions of Non-cash Assets to Owners” – IFRIC 18 “Transfers of assets from customers”

CMH Annual Report 2009 53 Subsidiaries

Issued Indebtedness share Effective holding by capital Activity (indirect)/direct Shares at cost subsidiaries 2009 2008 2009 2008 2009 2008 NAME OF COMPANY R % % R’000 R’000 R’000 R’000

Bonerts 20 1 (85) (85) – – – – CMH Autogas Products 100 6 (60) – – – – – CMH Car Hire 100 3 (100) (100) – – – – CMH Holdings 1 000 5 85 85 1 1 165 800 294 962 CMH Luxury Motors 3 000 000 1 (100) (100) – – – – CMH Luxury Motors (Lyndhurst) 200 1 (100) (100) – – – – CMH Luxury Motors (Umhlanga) 100 1 (75) (75) – – – – CMH Marine and Leisure 67 000 4 (100) (100) – – – – Combined Motor Finance 2 2 (100) (100) – – – – Datcentre Motors 250 000 1 (100) (100) – – – – Kempster Sedgwick 1 800 400 1 (100) (100) – – – – Mandarin Motors 100 1 (51) (51) – – – – Mandarin Motors Three 100 1 (100) (100) – – – – Mandarin Motors Two 100 1 (95) (75) – – – – Pipemakers 100 5 (70) (70) – – – – Power Financial Services (KZN) 100 2 (100) (100) – – – – Princess Yachts SA 100 4 – (50) – – – – Ute Developments 10 6 – (100) – – – – Waterworld 1 6 (100) (100) – – – – Whitehouse Motors 25 1 (100) (100) – – – –

1 1 165 800 294 962

Notes: 1. All subsidiaries are (Proprietary) Limited companies incorporated in South Africa. 2. Activity index: 1 – retail motor 2 – financial services 3 – car hire 4 – marine and leisure 5 – corporate services/other 6 – dormant /deregistered in current year 3. No business of a subsidiary was managed by a third party during the year under review.

54 CMH Annual Report 2009 Directors’ Emoluments

Executive directors MPD SK JD RTAC CL M Total Conway Jackson McIntosh Nethercott Odendaal Zimmerman R’000 R’000 R’000 R’000 R’000 R’000 R’000 2009 Salary 11 171 2 176 2 427 2 830 2 176 1 562 – Fringe benefits 851 181 181 181 185 123 – Contributions to pension and medical aid funds 1 042 210 243 266 179 144 – 13 064 2 567 2 851 3 277 2 540 1 829 –

2008 Salary 11 928 1 860 2 250 2 620 1 860 1 965 1 373 Fringe benefits 1 049 175 175 175 175 175 174 Contributions to pension and medical aid funds 1 044 189 214 233 164 196 48 14 021 2 224 2 639 3 028 2 199 2 336 1 595

Non-executive directors LCZ JTM L VP M Total Cele Edwards Gadd Khanyile Zimmerman R’000 R’000 R’000 R’000 R’000 R’000 2009 Fees 1 652 105 179 84 84 1 200 Fringe benefits 181––––181 Contributions to medical aid fund 58––––58 1 891 105 179 84 84 1 439

2008 Fees 867 67 160 56 84 500

Notes 1. All remuneration paid by subsidiary companies. 2. M Zimmerman was executive chairman until 17 October 2007, thereafter non-executive chairman. 3. CL Odendaal resigned 31 October 2008.

CMH Annual Report 2009 55 Directors’ Shareholding

MPD JTM SK JD RTAC CL M JW (‘000 shares) Total Conway Edwards Jackson McIntosh Nethercott Odendaal Zimmerman Alderslade

Beneficial shareholding at 29 February 2008 – direct 1 346 506 5 87 112 113 515 – 8 – indirect 74 976 1 113 – 5 000 25 395 – – 43 468 –

76 322 1 619 5 5 087 25 507 113 515 43 468 8

Shares acquired during year Option shares ex CMH Share Incentive Scheme – direct 75–––––75–– Other – direct 5 5 – indirect 517 517–––––––

597522––––75––

Shares disposed of during year – direct 957506––––451–– – indirect ––––––––– Retirement of director 139–––––139––

1 096506––––590––

Beneficial shareholding at 28 February 2009 – direct 330 5 5 87 112 113 – – 8 – indirect 75 493 1 630 – 5 000 25 395 – – 43 468 –

75 823 1 635 5 5 087 25 507 113 – 43 468 8

Options held subject to the terms and conditions of the CMH Share Incentive Scheme – at R2,06 per share 50––––50––– – at R5,12 per share 2 475 338 – 787 1 012 338–––

2 525338–7871 012388–––

56 CMH Annual Report 2009 Analysis of Ordinary Shareholders

Number of Number of Percentage of shareholders shares held (000’s) shares held 2009 2008 2009 2008 2009 2008

Individuals 419 409 4 699 5 720 4,4 5,3 Nominee companies and trusts 62 72 4 761 4 807 4,4 4,5 Other corporate bodies 99 102 98 050 96 878 91,2 90,2

580 583 107 510 107 405 100,0 100,0

Holdings 1 – 2 500 289 298 254 280 0,2 0,3 2 501 – 5 000 76 73 277 273 0,3 0,2 5 001 – 10 000 60 59 452 433 0,4 0,4 Over 10 000 155 153 106 527 106 419 99,1 99,1

580 583 107 510 107 405 100,0 100,0

Public shareholders 573 575 31 687 31 083 29,5 28,9 Non-public shareholders – directors of Company 7 8 75 823 76 322 70,5 71,1

580 583 107 510 107 405 100,0 100,0

Notes: 1. So far as it is known, the following shareholders, other than a director, are directly or indirectly beneficially interested in 5% or more of the ordinary issued share capital: – Momentum Group holds 5,6% – Old Mutual Group holds 5,5% – Nedbank Group holds 5,0% 2. A copy of the detailed share register as at 28 February 2009 is available on written request to the company secretary.

CMH Annual Report 2009 57 Stock Exchange Performance

2009 2008

Closing price 28 February 2009 (cents) 430 1 200 Volume of shares traded (‘000 shares) 10 250 11 098 Value of shares traded (R’000) 63 812 179 611 Number of transactions 168 222 Volume of shares traded as percentage of total issued shares (%) 9,5 10,3 JSE general retailers index 18 816 24 117 JSE all-share index 18 465 30 674 Lowest price 27 November 2008 (cents) 320 1 100 Highest price 5 March 2008 (cents) 1 200 2 145 Earnings yield 28 February 2009 (%) 1,8 7,6 Dividend yield 28 February 2009 (%) 6,5 5,1

Certification by the Company Secretary

I certify, in accordance with section 268G(d) of the Companies Act, that the Company has lodged with the Registrar of Companies all such returns as are required by a public company in terms of the Act and that all such returns are true, correct and up to date.

SK Jackson Company secretary 17 April 2009

58 CMH Annual Report 2009 Administration

REGISTRATION NUMBERS BANKERS Company registration number: 1965/000270/06 First National Bank of Southern Africa Share code: CMH TRANSFER SECRETARIES ISIN number: ZAE000088050 Computershare Investor Services (Proprietary) Limited DIRECTORS PO Box 61051 LCZ Cele, BCom, Postgrad Dip Tax, MAcc (Tax) (Independent, Marshalltown non-executive) 2107 MPD Conway, CA (SA) BUSINESS ADDRESS AND REGISTERED OFFICE JTM Edwards, CA (SA) (Independent, non-executive) 1 Wilton Crescent L Gadd, MA Hons (Social Sciences) (Non-executive) Umhlanga Ridge SK Jackson, BCom (Hons) (Tax Law), CA (SA) 4319 VP Khanyile, BCom (Hons) (Non-executive) POSTAL ADDRESS JD McIntosh, CA (SA) PO Box 1033 RTAC Nethercott Umhlanga Rocks M Zimmerman (Non-executive) 4320 JW Alderslade, CA (SA) (alternate to VP Khanyile) SPONSORS SECRETARY PricewaterhouseCoopers Corporate Finance (Proprietary) Limited SK Jackson Private Bag X36 AUDITOR Sunninghill PricewaterhouseCoopers Inc. 2157

Shareholders’ Diary

FINANCIAL YEAR-END – FEBRUARY Annual general meeting – May REPORTS Interim – October Annual financial statements – May DIVIDENDS Interim – declared October – paid December Final – declared April – paid June

CMH Annual Report 2009 59 Notice of Meeting

Notice is hereby given that the twenty-first Annual General Meeting of members of Combined Motor Holdings Limited will be held in the boardroom at the CMH Head Office located at 1 Wilton Crescent, Umhlanga Ridge, on Thursday, 28 May 2009 commencing at 15:30 for the following purposes:

1. To receive and adopt the annual financial statements for the year ended 28 February 2009.

2. To elect directors in place of Messrs JTM Edwards and SK Jackson, who retire at the annual general meeting. Messrs JTM Edwards and SK Jackson, who retire by rotation in terms of the articles of association, offer themselves for re-election.

3. To determine and confirm the remuneration of the directors for their services.

4. To consider and, if deemed fit, to pass with or without modification, the following resolution which will be passed as an ordinary resolution:

“That 36 080 560 unissued ordinary shares of no par value be placed under the control of the directors who may, subject to section 221 of the Companies Act, issue them at their discretion as and when they deem fit.”

5. To transact such other business as may be transacted at an annual general meeting of members.

A member who is entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote in his stead. The person so appointed need not be a member. Proxy forms should be forwarded to reach the registered office of the Company by not later than 16:00 on 27 May 2009.

By order of the board of directors

SK Jackson Secretary

17 April 2009

CURRICULA VITAE A brief curriculum vitae of the directors standing for re-election is as follows:

John Theodore Maitland Edwards was appointed to the board in 2002 and, a year later, was appointed chairman of the audit and risk committee. John has held a number of senior positions in both private and public enterprises and was, until his retirement in 1992, partner in charge of the Durban office of the Group’s external auditor. He has played an important role in developing a charter for the audit and risk committee and ensuring that the Group maintains a high standard of corporate governance, and is a member of the remuneration committee. He was last re-elected to office in 2006.

Stuart Keith Jackson BCom (Hons) (Tax Law), CA (SA) joined the Group in 1979 and was appointed a director in 1986. He is responsible for the Group's administration, treasury, secretarial and taxation departments. Stuart was last re-elected to office in 2006.

60 Designed by CMH Annual Report 2009 Printed by I Form of Proxy

COMBINED MOTOR HOLDINGS LIMITED ANNUAL GENERAL MEETING – 28 MAY 2009

I/We the undersigned, being the holder/s of ordinary shares of no par value in Combined Motor Holdings Limited, do hereby appoint

or or failing him the chairman of the meeting as my/our proxy to transact on my/our behalf at the annual general meeting of the Company to be held at 15:30 on Thursday, 28 May 2009 and at each adjournment thereof.

Signature(s) Date

Please indicate with an “X” in the appropriate space below how you wish your vote to be cast:

For Against Abstention

Ordinary Resolution Number 1

Ordinary Resolution Number 2

Ordinary Resolution Number 3

Ordinary Resolution Number 4

Ordinary Resolution Number 5

Notes: 1. A member who is entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote in his stead. The person so appointed need not be a member.

2. Proxy forms should be signed, dated and forwarded to reach the registered office of the Company, 1 Wilton Crescent, Umhlanga Ridge 4319, by no later than 16:00 on 27 May 2009.

3. If no direction is given as to how a vote is to be cast, then the proxy holder will be entitled to vote as he/she deems fit.

Registered office 1 Wilton Crescent Umhlanga Ridge 4319

Postal address PO Box 1033 Umhlanga Rocks 4320

CMH Annual Report 2009

www.cmh.co.za