CEO Hubert Brody said: "Imperial has delivered outstanding results notwithstanding the tough economic conditions which still prevail in many of our markets. We have focused on operational efficiencies, increasing our margins, managing costs tightly, lowering our debt and on sound marketing.  We've ensured that our acquisitions have been earnings enhancing and we continue to concentrate on capital management."

 

Operating profit was 34% higher, a substantial increase in a market which has not yet recovered from the recession, and headline earnings per share (HEPS) from continuing operations was 40% higher at 976 cents, compared to a 17% increase at the interim stage.  HEPS last year included a foreign exchange gain of R394 million (212 cents per share) which was earned on the repatriation of capital from European operations. 

 

All the divisions increased their operating profit, with the main contributors being Distributorships (+126%) and Insurance (+57%) divisions. Automotive Retail and Distributorships represent 44% of operating profit while the Logistics and the Car Rental and Tourism divisions, which have less volatile profit streams, represent a similar proportion. Notwithstanding a very turbulent global industrial and trading environment over the past two years, the Logistics divisions' profits were robust.

 

Group revenue from continuing operations was 2% higher at R53,4 billion, of which 59% was generated by the Automotive Retail and Distributorships divisions which derive the bulk of their revenue from the retailing of passenger and commercial vehicles, and 31% was generated by the Southern African and European logistics operations. Car Rental & Tourism and Insurance generated 10% of revenue. 

 

The group's operating margin of 6,2% improved substantially from 4,7% in 2009 due to a revival in certain of the group's markets and good cost management across the group.

 

Net finance cost reduced by 35% to R597 million. Gross interest bearing debt is down by almost R2 billion due to good working capital management, cash receipts from the sale of Imperial Bank and the effect of the stronger Rand on foreign debt balances.  Long term debt of R697 million was repaid.  Net debt (excluding preference shares) to equity is at 39% compared to 50% a year ago and 50% at December 2009. Approximately R750 million has been spent on acquisitions, and net debt was reduced by approximately R500 million.

 

Income from associates was 63% higher at R174 million and capex was R1,9 billion.  The tax rate was higher at 31% due to the CGT payable on the sale of Imperial Bank,  STC on dividends and share buybacks of R200 million to hedge share appreciation rights obligations.  Cash generation reduced by 27% mainly as a result of the delayed car rental de-fleeting because of the World Cup. 

 

A final ordinary dividend of 200 cents per share has been declared, which brings the total ordinary dividend for the year to 350 cents per share (2009: 200 cents per share), an increase of 75% on the prior year.

 

Management is also focusing on renewed growth in selected areas of the existing businesses where there is proven expertise. The recently announced acquisition of CIC Holdings Limited will accelerate the group's growth into the African continent. The transaction is still subject to regulatory approvals.

The group spent approximately R750 million on acquisitions during the year, including:

-          75% of Midas which markets and distributes quality automotive, D.I.Y and leisure products.

-          25% in MiX Telematics which is focused on vehicle tracking through the Matrix brand, commercial vehicle performance, driver monitoring and fleet management products and services. 

-          65% of the Goscor group, the sole distributor of well known branded industrial equipment in the country.

-          55% in Provaart, a chartering business in Rotterdam operating on the Rhine River.

 

The Distributorships division's new vehicle registrations, as reported to NAAMSA, are 54% up compared to a market growth of 2%. In its Auto Parts division the Midas acquisition became effective from 1 December 2009 and has made a meaningful contribution to divisional profits for seven months. Imperial is now the leader in the very substantial vehicle replacement parts market segment. Imperial retailed 73,326 new and 52,576 used vehicles.  The exceptional exposure of Hyundai and Kia through their sponsorship of the World Cup made a substantial contribution. 

 

While the global recession impacted negatively on all touring and transport businesses and normal trading business remains under pressure, the Car Rental and Tourism division achieved excellent year-on-year growth in revenue (12.3%) and operating profit (17.6%), with revenue days increasing by 9%, impacted positively by the World Cup. Springbok Atlas was the sole transporter of the 32 participating teams for the duration of the tournament. Having been responsible for the movement of sports teams during all key recent sports events in the country the company has established itself as the premier sports transport logistics provider in South Africa.

 

Due to its exposure to diverse industries, the Southern African Logistics Division succeeded in limiting the negative impact of the economic recession by growing revenue by 4,9% and operating profit by 3,4%. In spite of traditional seasonality which favours the first half, the division posted 7,9% higher operating profit in the second half.  Imperial Logistics International achieved an outstanding result in its 2010 financial year, especially in the second half, which is evidence of the strength of the recovery in industrial activity in Europe.  The 2010 results in Euro terms are better than reflected in ZAR terms due to the stronger Rand, with revenue in Euro down only 7.2% and operating profit up 20% for the period. 

 

Commenting on Imperial's prospects, Brody says, "The building blocks of our business are soundly positioned for further growth, but the economic recovery is still tentative. Uncertain economic trends prevail, especially increased workplace instability, high levels of unemployment in southern Africa, the impact of the strong currency on exports and high personal debt levels. "

 

"The 2010 financial year has delivered outstanding organic growth.  With low financial leverage, and substantial undrawn facilities, our balance sheet is currently stronger than at any time in the recent past.  This presents opportunities for acquisitive growth, which would be sought in areas where our existing skills and infrastructure would give us an advantage."

 

ENDS

 

For further information:

 

Brunswick                  +27 11 502 7300

Anne Dunn                  +27 82 448 2684

Tshepo Mophiring       +27 82 887 4124