Combined Motor Holdings Limited 2009 Annual Report

Combined Motor Holdings Limited

2009 Annual Report

Our Mission

CUSTOMERSTo provide a total commitment to customer satisfaction in all aspects of business, and to ensurethat our customers are treated fairly and equitably by a motivated, well-trained team ofspecialists.

EMPLOYEESTo provide a stable and challenging work environment in which employees are treated on anequal opportunity basis with open lines of communication, are encouraged to participate to themaximum of their ability and are rewarded commensurate with their achievement.

SUPPLIERSTo conduct our relationship in an ethical and supportive manner conducive to the achievementof mutual long-term profit and market share objectives.

SHAREHOLDERSTo produce a consistent, meaningful growth in earnings and dividends, commensurate with therisks involved, after making adequate provision for future expansion.

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

CMH Annual Report 2009

Heading at dateContents

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)


Group Profile and Structure

2 CMH Annual Report 2009

VOLVO 100%SWEDOCARCape Town, HatfieldPretoria East, Umhlanga RocksAUTO NORDICBryanston, Westrand

FORD/MAZDA 100%KEMPSTER AUTODurban, Bluff, Umhlanga RocksSTEYNS AUTOPretoriaRAND AUTORandburgMETRO AUTOGezinaHATFIELD AUTOHatfield

NISSAN 100%DATCENTRE NISSANDurban, PietermaritzburgHillcrest, Pinetown CMH NISSANMidrand

FIAT/ALFA ROMEO 100%CMH Umhlanga RocksCMH Pietermaritzburg

GENERAL MOTORS 100%EAST RAND GMBoksburgWEST RAND GMConstantiaUMHLANGA GMUmhlanga Rocks

TOYOTA/LEXUS 100%CMH TOYOTA ALBERTONAlbertonCMH TOYOTA UMHLANGAGatewayCMH TOYOTA MELROSEMelrose ArchLEXUS GATEWAYGateway

JAGUAR 100%Jaguar Umhlanga Jaguar Cape Town

HONDA 100%Honda HatfieldHonda MenlynHonda Pinetown

NISSAN DIESEL 100%CMH COMMERCIALWestmead, Pietermaritzburg

LAND ROVER 100%Land Rover Cape TownLand Rover PretoriaLand Rover Umhlanga

BMW/MINIMenlyn Auto 100%Umhlanga Auto 75%Lyndhurst Auto 100%

VOLKSWAGEN 100%Cape Town

PEUGEOT 100%Peugeot MenlynPeugeot Cape TownPeugeot DurbanPeugeot Johannesburg South

LAMBORGHINI 100%Bryanston, Cape Town

INVESTMENT CARS 100%Bryanston, Cape Town

BMW APPROVED REPAIR CENTREWynberg 100%Umhlanga Rocks 75%

SUZUKI 100%Pinetown

FIRST CAR RENTAL 100%Johannesburg, Bloemfontein, Port Elizabeth, Kimberley, Upington, East London, Nelspruit, George, Durban,Richards Bay, Pietermaritzburg and Cape Town Airports, Durban, Cape Towncentral, Kempton Park, Sandton,Randburg, Pretoria, Lyndhurst, RichardsBay, Pietermaritzburg, Polokwane,Kimberley, Upington, Stellenbosch,Rondebosch, Boksburg, Pinetown, Emerald Casino (Vanderbijlpark), Industria,Bloemfontein, Port Elizabeth, Jacobs,Menlyn, Umhlanga Ridge, Witbank,Midrand, Mthatha

MARINE AND LEISURECMH MARINE AND LEISURE 100%CMH RECREATIONAL PRODUCTS Randburg

WATERWORLD Randburg, Cape Town

DISTRIBUTION ANDFRANCHISINGBONERTS 85% Johannesburg, Turffontein

MANDARIN MOTORS 95%Pretoria, Durban

NATIONAL WORKSHOP EQUIPMENT 70%Durban

ARMORMAX 100%Bryanston

FINANCIAL AND SUPPORTSERVICESTREASURY 100%WARRANTY 100%CREDIT LIFE 100%VEHICLE INSURANCE 100%CMH FINANCE 100%CMH INSURANCE 100%CMH CARSHOP 100%CMH IT 100%

RETAIL MOTOR DEALERSHIPS CAR HIRE

3CMH Annual Report 2009

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)

Group Financial Highlights

2002 2004 200520032000 2001 2006 2007Dividends per share Headline earnings per share

155,1

36,6

107,1

15,9

56,6

13,6

46,7

11,8

38,7

10,0

32,3

8,0

21,0

68,4

52,6

174,0

97,7

61,6

40,4

35,3

24,924,223,7

27,926,3

39,8

21,6

2008 2009

28,024,6

1,7

20072006200520042003200220012000 2008 2009

421

453

334

265

221

186157

120

451

2 4382 418

2 033

1 7251 714

1 4261 213

3 0103 115

420

20072006200520042003200220012000 2008 2009 20072006200520042003200220012000 2008 2009

2 722

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

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


JEBB McINTOSHCA (SA)Chief executive officerAge: 63Appointed in 1976

STUART JACKSONBCom (Hons) (Tax Law), CA (SA)Financial directorAge: 56Appointed in 1986

RAY NETHERCOTTFranchise director for Ford,Mazda, BMW, Peugeot, Mini, Bonerts, Lamborghini andInvestment CarsAge: 59Appointed in 2001

MARK CONWAYCA (SA) Franchise director for Nissan,Fiat, Alfa, Honda, GeneralMotors, Nissan Diesel andWaterworldAge: 53Appointed in 2000

VUSI KHANYILEBCom (Hons)Non-executive Age: 58Appointed in 2007

JOHN EDWARDSCA (SA) Independent, non-executive Chairman of audit committeeand member of remunerationcommitteeAge: 73Appointed in 2002

ZEE CELEBCom, Postgrad Dip TaxMAcc (Tax)Independent, non-executive Member of audit committeeAge: 56Appointed in 2007

LINDIWE GADDMA Hons (Social Sciences)Non-executiveAge: 38Appointed in 2007

Board of Directors

MALDWYN ZIMMERMANNon-executive chairmanChairman of remuneration committee Age: 74Appointed in 1976

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



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

Group Ten-Year Financial Review


Value-Added Statement

2009 2009 2008 2008R’000 % R’000 %

WEALTH CREATEDRevenue 6 581 641 8 811 995Cost 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 DISTRIBUTIONTo employees – remuneration and benefits 431 797 81 467 584 68To lenders – net finance costs on borrowings 33 295 6 45 472 6To government – taxation 11 023 2 54 857 8To shareholders – dividends 30 094 6 65 988 9Retained for reinvestment in the Group

– depreciation 24 766 5 24 296 4– retained earnings – – 32 185 5

530 975 100 690 382 100

Employees

6% 5%

81% 68%

5%4%9%

8%

6%

6%

2%

Lenders

Government

Shareholders

Depreciation

Retained earnings

2009

WEALTH DISTRIBUTION

2008

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

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

Group Operations


FRANCHISE ToyotaOperating locations Alberton, Gateway, Melrose ArchStaff employed 151Senior management A de Kock, P de Villiers, G Garrod, C Webber

FRANCHISE LexusOperating location GatewayStaff employed 9Senior 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

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

11

FINANCIAL AND SUPPORT SERVICESFRANCHISE 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

DISTRIBUTION AND FRANCHISINGFRANCHISE 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

Group Operations


MARINE AND LEISUREFRANCHISE 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

CAR HIREFRANCHISE First Car Rental

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, PortElizabeth, 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

12

IMPORT AND DISTRIBUTIONFRANCHISE Mandarin Motors

Staff employed 26

Senior management M Smal, I Pardy, A Tidbury

Report of the Chairman


It gives me pleasure to present my report on theactivities of the Group during the year ended 28 February 2009.

The year was undoubtedly the most difficult Ihave experienced. The challenges presentedduring the previous year have been exacerbatedby the global economic crisis, triggered by thesub-prime loans meltdown in the United States.

Dominated by a 25% fall in revenue, primarilyas the result of the slump in vehicle sales,operating profit fell 78% to R46,4 million, and attributable headline earnings declined75% to R26,4 million.

One positive feature of the year’s trading wasthe Group’s firm grasp on its cash flow. Cashgenerated from operations enabled the Groupto fund a dividend payment of R30 million inJune 2008, repay loans and dividends of R31,5 million to its BEE partner, and still end theyear with cash resources of R212 million (2008:R223 million).

With an eye on funding working capital forfuture expansion, and in view of the ever-tightening lending criteria being applied byfinance houses, the directors haverecommended that no dividend be paid inrespect of the year under review.

ECONOMIC ENVIRONMENTAs the saying goes, if the USA sneezes, thewhole world catches a cold – and the creditcrisis has certainly caused an impact across theglobe. Whilst South Africa is in relatively goodshape compared with many of the world’ssuper-powers, economic growth, alreadydeclining, is expected to fall further as morehouseholds come under increasing strain as aresult of falls in disposable income and networth. Rising unemployment will continue toundermine income and spending levels.

The country’s currency is an area of vulnerability.Currency weakening fuels inflation in emergingcountries that have current account deficits anddepend on inflows of foreign capital. Loss ofinvestor confidence in South Africa hastranslated into the depreciation of the randagainst major currencies.

In the retail motor industry, the consensusforecast is for new vehicle sales to decline by8% during calendar 2009. Motor vehiclefinance houses are licking the wounds causedby their liberal lending criteria during the periodpreceding the introduction of the NationalCredit Act. Tougher requirements, and increasedcosts of capital, have meant a 180 degree turn,to the extent that on average less than one ofthree applicants for vehicle finance is approved.

On the positive side, interest rates have fallen2,5 percentage points since December 2008and a further 2,5 percentage points cut isexpected this year. This will help consumersreduce their levels of indebtedness and hastenthe time when they are ready and able to incurfresh debt.

BLACK ECONOMIC EMPOWERMENTIn contrast to numerous reports of BEE dealswhich are failing because of high interest ratesand declining profitability, I am happy to reportthat the Group’s transaction with ThebeInvestment Corporation remains on a soundfooting. Strong Group cash flows have enabledit to maintain its scheduled debt servicing andcapital repayments, and forecasts indicate thatthe forthcoming year will be no different.

THE YEAR AHEADA continued difficult trading environment isexpected. Budgets for the new year anticipatemodest or no volume growth in the variousoperating segments, and the expected profitimprovement will be largely driven by costcutting measures and interest cost savingsthrough tight control over working capitallevels.

DIRECTORS AND MANAGEMENTCL (Stoffel) Odendaal resigned from the Groupin October 2008 after 26 years of employment,the last 14 of which he served as an executivedirector. I thank Stoffel for his untiring effortsand invaluable input, and wish him well as hepursues his personal interests.

The board of directors now comprises twoindependent, non-executive, three non-executive and four executive members. Theadverse trading conditions place a greater strainand burden of responsibility on the team and Itake this opportunity to thank them for thetough and uncompromising decisions whichthey have been forced to make to ensure theongoing viability of the Group.

To the Group’s management and staff, I realisethat it has been a year of more work for lessreward. However, your persistent pursuit of thebasic tenants of good business will enable theGroup to realise its dream of another decade ofrising earnings. I recognise and commend yourefforts.

M Zimmerman17 April 2009

“One positivefeature of theyear’s tradingwas theGroup’s firmgrasp on itscash flow”

Report of the Chief Executive Officer


The year under review was arguably the mostdifficult trading period for the retail motorindustry in the past 50 years. The month-on-month decline in new vehicle sales continued tothe extent that the industry has nowexperienced 24 consecutive months of negativegrowth. Over a two-year period the cumulativeeffect during a number of months was a 40%fall in sales levels.

In contrast to conservative predictions made in2006/7 of a national passenger and lightcommercial market of between 800 000 and 1 000 000 units sales by 2010, the reality is thatsales for calendar 2008 were 498 900 units. Ofconcern however, is the continued falling trendduring this period. The average monthly saleslevel during the first six months was 44 750,whilst that for the second six months was 38 340. During the last quarter of the Group’sfinancial year, sales averaged 30 939 per month.The effects of locally high interest rates, petroland food prices, coupled with over-indebtedconsumers, have been worsened by theinternational credit crisis and the consequentlimited availability of vehicle finance facilities.

FINANCIAL REVIEWA number of positives were achieved during theyear. The gross margin on revenue increasedfrom 15,0% to 16,7%. Despite an inflation rateof 8%, operating expenses were reduced by7%, and tight control over cash resourcesenabled a 27% reduction in net interest costs.However, in the face of a 25% decline inrevenue, it was inevitable that profit beforetaxation would be severely impacted.

A conservative review of the Group’s goodwillasset indicated the need for an impairmentcharge of R21,6 million. The tax charge for theyear is disproportionately high principallybecause of the goodwill impairment chargewhich is not tax deductible, and because ofassessable losses in various subsidiaries whichmanagement believes will not be recoverable.

The overall result is that basic earnings per sharedeclined 92% and headline earnings,discounting the effects of the goodwillimpairment charge and capital profits, fell 75%.On the strength of the prior year earnings, adividend of R30 million was paid in June 2008;however no dividend was paid in December2008 and the directors have not recommendeda payment for June 2009.

Despite the disappointing earnings, the Group’sbalance sheet remains sound, and the cash flowstatement records strong cash generation.Interest-bearing debt is a negligible R5 millionand the Group’s current ratio and quick ratiohave been constant at 1,3 and 0,4 respectivelyfor a number of years. Cash of R69 milliongenerated from operating activities enabled theGroup to fund the abovementioned R30 milliondividend and to maintain its scheduleddistribution of R32 million (dividends and loanrepayments) to its BEE partner. Strong cash flowcontrol is viewed as a vital component of theGroup’s future. In a recent report, internationalratings agency Fitch expressed the view thatmotor companies with strong cash generationand financial flexibility will be better positionedto weather the economic downturn. Theindustry has already experienced difficulty inrenewing finance facilities, with banks reportingthat in excess of 1 000 dealers, mainly smallused vehicle operations, have had facilitiesterminated or severely reduced.

RETAIL MOTORNational passenger vehicle sales declined 23%and light commercial vehicles 17% during thefinancial year, and it is estimated that the usedmarket reduced similarly. The principal reasonsfor the fall were the high debt levels underwhich consumers were labouring, and theconsequent reluctance of the motor financehouses to extend further credit during a periodwhen they too were facing high write-offs andan increased cost of funds. Whilst customerinterest on showroom floors was high, thecredit approval levels fell from approximately55% to below 25%. Customers that gainedapproval were charged higher interest ratesthan they previously enjoyed, with the resultthat the first 1,5 percentage points drop in theprime rate was offset by the higher bankmargin.

The three highest value overhead expenses in atypical dealership are staff costs, propertyrentals and demonstration vehicles/petrol. Sinceits peak during mid-2007, the Group’sheadcount in this segment has been reduced by640 to its present level of 2 005 employees. Thisreduction has been mainly effected by theclosure of unprofitable operations and thetrimming of backroom unproductive staff. Onlya small portion represents sales and/orworkshop productive functions. Over the sameperiod the number of properties occupied by

“The yearunder reviewwas arguablythe mostdifficulttrading periodfor the retailmotor industryin the past 50 years”


the Group has been cut by 17 through termination ofbusinesses or rationalisation and sharing of facilities. In someinstances the lease rentals have had to be carried although thepremises were vacant, but all such costs, and the expectedfuture commitments, have been expensed in the current year.The fleet of demonstration vehicles, for both customer and staffuse, has been reduced by 44%.

Fortunately the Group’s workshops and parts departmentsperformed well, providing consistent returns and a bufferagainst the more volatile sales departments.

During 2007, the Group secured the franchise for the importand local distribution of various Chinese-sourced vehicles. For anumber of reasons the venture did not prove successful and isin the process of being discontinued. The imported vehicles arenot of the same high build quality as locally manufacturedvehicles but, priced correctly, do offer competitive value formoney. A number of well-publicised incidents with competitiveChinese-sourced vehicles soured both the customer and financehouses’ perception of the units, and sales were affected. Thefourth quarter weakening of the South African currencyincreased the replacement price of the vehicles to the extentthat the pricing gap necessary to compete with the local marketwas no longer possible. The Group’s exposure to this segmentof the market is insignificant, and will be liquidated during thenext four months.

MARINE AND LEISUREThe depressed economic conditions were keenly felt by thisdivision, which operates largely at the luxury end of the market.Revenue fell 42%, forcing a major overhaul of the business andits operating locations. The head count of 134 in mid-2007 hasbeen reduced to 59, operating locations have been cut fromfive to two, and assets from R157 million to R122 million. A further asset reduction of R15 million is expected in the nextsix months. This division markets quality brands and, with itslow cost base, has the capacity to return substantial marginswhen the economy turns.

CAR HIREThe new trading and brand name “First Car Rental” wassuccessfully launched in April 2008, and mid-year the divisionconcluded an alliance with Sixt Car Rental, a major Europeanbrand based in Germany.

Although revenue increased 18%, higher interest costs ofholding the vehicle fleet, coupled with lower resale values in thedepressed used vehicle market, eroded margins to the extentthat the division ended the year with an operating loss of R1 million. Daily hire rates remain competitive and have shownlittle growth over the past 18 months, and the internationalcredit crisis has affected foreign tourism.

On the positive side, the recent interest rate reductions havehad, and will continue to have, a favourable effect. Each onepercentage point reduction saves the division R4,1 millionannually. In addition, the major sporting events scheduled in thecountry during this and next year will boost revenue.

FINANCIAL SERVICESAs predicted, revenue from the sale of insurance policies hasreduced following the National Credit Act’s prohibition of thesale of term policies. The sale of monthly policies has increased,but with the high early termination rate being experienced, it isunlikely that future income levels will improve materially.

PROSPECTSWhilst it appears that the retail motor market has bottomed,uncertainty surrounds the timing of the upturn. I believe thatnational sales will be down on last year, with the first half beingin line with the second half of calendar 2008, and modestgrowth during the third and fourth quarters. The Group’sbudget predicts little or no volume growth in the retail motorand marine and leisure divisions. Substantial restructuringcharges, principally retrenchment and early lease terminationcosts, have been fully accounted for and will reduce operatingcosts going forward. Lower interest rates are expected to reducefinance costs. The net result is that a relatively modest increasein sales volumes could yield a substantial bottom lineimprovement. When this volume growth will materialise isdifficult to predict.

APPRECIATIONDuring the year the Group lost the service of two long-standingstalwarts. Stoffel Odendaal, an executive director, retired inOctober 2008 to follow his personal interests. I appreciate his26 years of service and the honest and ethical way in which heserved the Group.

Solly Ussuph, a man who worked at subsidiary KempsterSedgwick before it became part of the Group, passed away lastmonth after 40 years’ service. He held the position of seniorregional accountant and was held in high esteem by all whowere in contact with him. My condolences are extended to hisfamily.

To the motor manufacturers, finance houses, insurancecompanies and other suppliers who have supported the Groupduring the year I express my gratitude.

I offer my thanks to the executive team, management and staffwho have performed bravely in a stormy sea. In the face ofmajor restructuring which, especially where staff retrenchmentsare involved, is never easy nor pleasant, it is difficult to focus onthe business of making profit. To your credit you maintainedconfidence in the Group’s future and worked untiringly to attainthe key business objectives.

JD McIntosh17 April 2009

Corporate Governance


Combined Motor Holdings Limited and its subsidiaries are fullycommitted to the principles of fairness, accountability,transparency and integrity associated with good corporategovernance. Through this process shareholders and otherstakeholders may derive assurance that the Group is beingethically managed according to prudently determined riskparameters in compliance with generally accepted corporatepractices. The Group, in all material respects, complied with theKing II Report on Corporate Governance during the accountingperiod, and the board of directors continually strives to enhancecompliance.

BOARD OF DIRECTORSThe board comprises two independent, non-executive directors,three non-executive directors and four executive directors. Theboard applies the guidelines contained in the ListingsRequirements of the JSE Limited when considering a director’sindependence. The roles of chairman and chief executive officerdo not vest in the same person. This ensures a balance ofpower and authority between them.

All directors are required to retire from office every three yearsat the annual general meeting and, being eligible, may submitthemselves for re-election at the same annual general meeting.During the year, new directors may be appointed by the board,subject to confirmation of this election by the shareholders atthe next annual general meeting. Accordingly, the appointmentsof directors by the board during the financial year are requiredto be confirmed by the shareholders at the next annual generalmeeting.

The independent and non-executive directors bring with themdiversity of experience, insight and independent judgement onissues of strategy, performance, resources, marketing andstandards of conduct.

The executive directors are closely involved in the day-to-daybusiness activities of the Group and are responsible for ensuringthat decisions, strategies and views of the board are timeouslyimplemented.

The board is responsible for:

– overall Group strategy;

– acquisition and divestment policy;

– approval of major contracts;

– consideration of financing matters;

– monitoring of operational performance against budget andkey performance indicators, and reviewing the Group’spublished results;

– effective, timeous and transparent communication withstakeholders;

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

– ensuring ethical behaviour of all employees and compliancewith all laws and regulations;

– identifying and evaluating suitable candidates for possibleappointment to the board; and

– selecting, monitoring and evaluating the directors and othersenior executives.

There are no long-term contracts of service between the Groupand any of the directors.

All directors have unrestricted access to the chairman, chiefexecutive officer and financial director/company secretary.Directors are encouraged, at the reasonable cost of the Group,to seek independent, professional advice on all matters whichthey consider necessary.

Meetings of the board and its sub-committees are held atvarying intervals during the year. The chairman and chiefexecutive officer encourage full and proper deliberation on allmatters requiring the board’s attention and obtain optimuminput from all directors.

Attendance at meetings during the year under review, is tabledat the top of page 17.

AUDIT AND RISK ASSESSMENT COMMITTEEThe audit and risk assessment committee comprisingindependent, non-executive members, JTM Edwards (chairman)and LCZ Cele, met twice during the year. The meetings wereattended, by invitation, by the chief executive officer, thechairman, the financial director and representatives of theinternal audit department and external auditor.

The function of the committee is to assist the board indischarging its oversight responsibilities in the following areas:

– compliance with applicable laws and regulations;

– transparency and integrity of financial statements;

– effectiveness of the internal controls and risk managementprocedures;

– performance of the internal audit department;

– appropriate involvement and liaison with the independent,external auditor and the audit process; and

– overview of corporate governance.

To enable the committee to fulfil its duties in these areas,comprehensive reports are presented to the committee by:

– the external auditor, in respect of their audit plan and theresults of the financial audit and any other non-audit servicesprovided by the external auditor in compliance with theGroup’s policy on non-audit services;


– the internal audit department regarding their independence,the effectiveness and adequacy of resources of thedepartment and providing an overview of the results of itsactivities for the period; and

– the financial director, covering the financial results of theGroup.

The committee updates the board on the committee’s activities.During the current period, and in order to fulfil its mandate,these activities included:

– a review of the procedures in place for identifying businessand financial risks and the appropriateness and adequacy ofthe systems of internal and operational control designed tominimise such risks;

– a review of the Group’s policy for preventing and detectingfraud and a review of the results of management’sinvestigations of reported fraudulent acts or any otherunethical activity by employees or suppliers;

– understanding and confirming that the financial reportingprocess used to prepare financial statements, analystbriefings and press announcements is accurate, balanced andconsistent with published financial information;

– a review of the financial statements and of the keyaccounting policies and judgements or estimates made bymanagement which have a material impact on the financialstatements;

– confirming the Group’s intention and ability to operate as agoing concern;

– reviewing the effectiveness of the system for monitoringcompliance with laws and regulations;

– an evaluation of the independence of the external auditorand recommending the appointment of and the fees payableto the external auditor; and

– providing effective communication between the board,management and the internal and external auditors.

The committee assesses its performance both collectively andthat of individual members on an annual basis. The results ofthis self-assessment are reported to the board.

Committee members have unrestricted access to all employees,directors and information required in the performance of theirduties. The committee is satisfied that, based on their activitiesin the 2009 financial year, the Group’s risk management andinternal control processes are adequate and are functioningeffectively, and that the Group has adequate resources tocontinue in operational existence for the foreseeable future.

REMUNERATION COMMITTEEDuring 2008, the non-executive chairman of the Group, M Zimmerman, was appointed as chairman of the remunerationcommittee which included JTM Edwards. Two meetings wereheld during the year and these were attended, by invitation, bythe chief executive officer and financial director.

The function of the committee is to review the Group’sremuneration strategy to ensure that executive and seniormanagement are fairly and appropriately remunerated for theircontribution to the operating and financial performance of theGroup. The committee also recommends the fees that shouldbe paid to non-executive directors. Remuneration packagesencompass the full range of benefits including basic salary,profit incentives, share options and retirement benefits. TheGroup’s remuneration philosophy is to pay industry-competitivebasic rates and then to reward employees through incentiveschemes for superior performance. No discrimination is madebetween individuals based on age, gender, marital or otherpersonal status. A significant proportion of the remuneration ofall senior personnel is performance-based.

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


INTERNAL AUDITThe board of directors is responsible for the Group’s systems ofinternal control and for reviewing their effectiveness. Thesesystems, which are designed to manage rather than eliminatethe risk of failure to achieve business objectives, providereasonable, but not absolute, assurance against materialmisstatement or loss. Within these systems is an ongoingprocess to identify, evaluate and manage the significant riskareas faced by the Group during the year under review.

A detailed operational checklist has been compiled.Comprehensive compliance testing is conducted at regularintervals. Written reports on areas of non-compliance areprepared for the audit and risk assessment committee andoperational managers, and follow-up testing scheduled.

EXTERNAL AUDITORThe Group’s external auditor, PricewaterhouseCoopers Inc.,provides an independent opinion on the financial statements.The external audit provides reasonable, but not absolute,assurance of the fair presentation of the financial statements.

GOING CONCERNAfter making diligent enquiries, the directors have a reasonableexpectation that the Group has adequate resources to continuein operational existence for the foreseeable future. Suchexpectation is based on cash flow forecasts and availablefinancing facilities. Forecasts were stress-tested usingconservative profit estimates and working capital requirements,and cash resource levels remained positive. For this reason thefinancial statements have been prepared on the “goingconcern” basis.

CODE OF ETHICSThe Group strives to conduct its business in a manner whichconforms to the highest standards of ethical and moralbehaviour, and in compliance with all laws and regulations. TheGroup has adopted a Code of Ethics incorporating these values.This Code of Ethics encompasses the principles endorsed in theCode of Corporate Practices and Conduct, as outlined in theKing II Report on Corporate Governance. The Code of Ethics isregularly communicated to employees and they are aware thatfailure to comply will result in disciplinary action.

The Group subscribes to “Whistle Blowers”, which encouragesall employees to report suspicious or unethical behaviour withinthe Group on a confidential basis. Reported incidents aresubmitted to the chief executive officer of the Group and theaudit and risk assessment committee for investigation.

EMPLOYMENT EQUITYEmployment equity policies have been implemented within theGroup to create an environment in which employees frompreviously disadvantaged backgrounds are trained, instructed,promoted and rewarded according to their initiative, loyalty andwork ethic. The Group has, during each year since the inceptionof the Skills Development Act and Employment Equity Act,

exceeded its training and development targets. Full compliancewith the requirements of these Acts has been achieved and theGroup has timeously submitted the report in terms of Section21 of the Employment Equity Act. As a result, the Group has,over the past four years, recouped in full its costs in respect ofthe Skills Development Levy. An extract of the most recentreport submitted, as at 31 August 2008, is tabled at the top ofpage 19.

The Group continues to move towards an organisationalstructure which reflects the diverse mix of the population, andsupports the principles embodied in the National SkillsDevelopment strategy. Rapid growth in the retail motor industryhas led to a shortage of manpower skills. The Group is focusingon training a second tier of management in all branches anddepartments. This programme has already proved successful,with more than 75% of senior appointments being from withinthe Group. The programme of adding 40 technical apprenticesper annum, the majority of which are historically disadvantagedindividuals, is proving successful and will be continued.Presently, 39% (2008: 30%) of the Group’s upper and middlemanagement structure (dealer principals, department managers,accountants and finance/insurance specialists) are from apreviously disadvantaged background.

ENVIRONMENTAL AND SOCIALThe board of directors acknowledges that the achievement ofenvironmental, health and safety standards is an importantfeature of the Group’s social responsibility. Although the Group’smajor activities do not pose a significant threat to theenvironment, of particular concern to the board is themaintenance of safety and environmental standards in theGroup’s workshops. Regular inspections are performed toensure that safety measures, particularly with regard to vehicle-lifting equipment and oil-dispensing systems, comply with rigidpolicies and procedures.

Group involvement in contributing to the social upliftment ofthe disadvantaged members of our society is, for the main part,decentralised to the geographic areas represented by thevarious operations. Major programmes supported include:

– “Reach for a Dream”; and

– Training and Resources in Early Education (“TREE”). This is anorganisation which promotes early childhood developmentprimarily in rural areas, and provides education on parenting,childcare, HIV/AIDS and self-help schemes.

The significant potential risk posed by HIV/AIDS to both Groupemployees and society in general is recognised. Awarenessseminars have been conducted at all Group trading locations.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“B-BBEE”)The Group is fully committed to the government’s Broad-basedBlack Economic Empowerment (“B-BBEE”) policies and thedirectors believe that their commitment to the development ofB-BBEE initiatives will generate long-term benefits for both theGroup and the country as a whole.

Corporate Governance


With effect from 1 March 2006, the Group sold a 25% equitystake in its Umhlanga Rocks BMW/Mini dealership to two blackindividuals, one female. This was followed in December 2006 by the sale to Thebe Investment Corporation of a 15% equityshare of the Group’s operations. The Group advanced R124 million to assist Thebe with the funding of this acquisitionand included two Thebe-appointed directors on the board ofdirectors. VP Khanyile was appointed in January 2007 and L Gadd in July 2007. In addition, LCZ Cele was appointed to theboard of directors and to the audit and risk assessmentcommittee in July 2007 as an independent, non-executivedirector.

The Codes of Good Practice on Black Economic Empowermentreleased in February 2007 have made it a business imperative todetermine a B-BBEE scorecard rating. The scorecard rating forthe car rental segment, falling under CMH Car Hire (Proprietary)Limited, has been independently verified at Level 5. Theremainder of the Group will be scored and rated as one entity.The scorecard rating will be ascertained as at the financial year-end and is scheduled to be completed in July 2009 andindependently verified in August 2009.

Designated Non-designated

White Foreign

Occupational levels Male Female male nationals TOTAL

A C I A C I W W M 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


Report of the Audit Committee

The audit committee of the Company and the Group haspleasure in submitting this report, as required by sections 269Aand 270A of the Companies Act.

1. Functions of the audit committeeThe audit committee has discharged its functions as follows:

1.1 Reviewed the interim and year-end financial statements,culminating in a recommendation to the board. In thecourse of its review the committee:

• took appropriate steps to ensure that the financialstatements are prepared in accordance withInternational Financial Reporting Standards (IFRS)and the South African Companies Act;

• considered and, when appropriate, maderecommendations on internal financial controls; and

• dealt with concerns or complaints relating to thefollowing:

– accounting policies;

– internal audit;

– the auditing or content of the annual financialstatements; and

– internal financial controls;

1.2 Reviewed the external audit reports on the annualfinancial statements;

1.3 Confirmed the internal audit charter and audit plan;

1.4 Reviewed the internal audit and risk managementreports and, where relevant, made recommendations tothe 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 theexternal auditor; and

1.8 Determined the nature and extent of allowable non-audit services and approved the contract terms for theprovision of non-audit services by the external auditor.

2. Members of the audit committee2.1 The audit committee comprises two independent non-

executive directors, LCZ Cele and JTM Edwards(chairman).

2.2 The members of the audit committee have at all timesacted in an independent manner.

3. Frequency of meetingsThe audit committee met twice in the financial year underreview.

4. AttendanceThe internal and external auditors, in their capacity asauditors to the Company and Group, attended and reportedto all meetings of the audit committee.

Executive directors and relevant senior managers attendedthe meetings by invitation.

5. Confidential meetingsAudit committee agendas provide for confidential meetingsbetween the committee members and the internal andexternal auditors.

6. Independence of external auditorDuring the year under review the audit committee revieweda report by the external auditor and, after conducting its ownreview, confirmed the independence of the auditor.

7. Expertise and experience of financial directorAs required by JSE Listings Requirements 3.84(h), the auditcommittee has satisfied itself that the financial director hasappropriate expertise and experience.

JTM EdwardsChairman

17 April 2009


Approval of the Financial Statements

DIRECTORS’ RESPONSIBILITYThe board of directors reports as follows with reference to boththe Company and the Group:

– the directors are responsible for the preparation, integrity,and fair presentation of the financial statements. Thefinancial statements presented on pages 23 to 57 have beenprepared in accordance with International Financial ReportingStandards (“IFRS”) and in the manner required by theCompanies Act of South Africa and include amounts basedon judgements and estimates made by management;

– the directors consider that in preparing the financialstatements they have used the most appropriate accountingpolicies, consistently applied and supported by reasonableand prudent judgements and estimates, and that all IFRSsthat they consider to be applicable have been followed;

– the directors are satisfied that the information contained inthe financial statements fairly presents the results ofoperations for the year and the financial position of theCompany and Group at year-end. The directors also preparedthe other information included in the annual report and areresponsible for both its accuracy and its consistency with thefinancial statements;

– the directors have responsibility for ensuring that accountingrecords are kept. The accounting records should disclose withreasonable accuracy the financial position of the Companyand Group to enable the directors to ensure that the financialstatements comply with the relevant legislation;

– the Company and the Group operated in a well-establishedcontrol environment, which is well documented and regularlyreviewed. This incorporates risk management and internalcontrol procedures, which are designed to providereasonable, but not absolute, assurance that assets aresafeguarded and the risks facing the business are controlled;

– the going-concern basis has been adopted in preparing thefinancial statements. The directors have no reason to believethat the Group or any Company within the Group will not begoing concerns in the foreseeable future, based on forecastsand available cash resources. These financial statementssupport the viability of the Company and the Group;

– the Code of Corporate Practices and Conduct has beenadhered to; and

– PricewaterhouseCoopers Inc., the Group’s external auditor,audited the financial statements, and their report is presentedon page 22.

The financial statements were approved by the board of directorsand are signed on its behalf by:

JD McIntosh M ZimmermanChief executive officer Chairman

17 April 2009

Independent Auditor’s Report


TO THE MEMBERS OF COMBINED MOTOR HOLDINGS LIMITEDWe have audited the annual financial statements and groupannual financial statements of Combined Motor HoldingsLimited, which comprise the directors’ report, the balance sheetand the consolidated balance sheet as at 28 February 2009, theincome statement and consolidated income statement, thestatement of changes in equity and the consolidated statementof changes in equity, the cash flow statement and consolidatedcash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes, as setout on pages 23 to 57.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe Company’s directors are responsible for the preparation andfair presentation of these financial statements in accordance withInternational Financial Reporting Standards, and in the mannerrequired by the Companies Act of South Africa. This responsibilityincludes: designing, implementing and maintaining internalcontrols relevant to the preparation and fair presentation offinancial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that arereasonable in the circumstances.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. Thosestandards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurancewhether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accountingestimates made by the directors, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.

OPINIONIn our opinion, the financial statements present fairly, in allmaterial respects, the financial position of the Company and ofthe Group as at 28 February 2009, and of their financialperformance and their cash flows for the year then ended inaccordance with International Financial Reporting Standards andin the manner required by the Companies Act of South Africa.

PricewaterhouseCoopers Inc. Director: ME Jones

Registered Auditor

Durban 17 April 2009

Report of the Directors


Your directors have pleasure in submitting their report on theaffairs of the Company and the Group during the year ended 28 February 2009.

NATURE OF BUSINESSThe Company’s business is that of an investment holdingcompany, its principal assets being its investment in and loan toCMH Holdings (Proprietary) Limited, and a preference shareinvestment in Main Street 445 (Proprietary) Limited.

Through its subsidiaries the Group has significant interests inretail motor, car hire, marine and leisure and financial services.Full details of the Group’s operations and operating locationsappear on pages 2 and 8 to 12.

The Company is listed in the “General Retailers” sector of the JSE Limited.

OPERATING RESULTSFull details of the operating results of the Company and theGroup are set out in the attached financial statements.

SHARE CAPITALDetails of the authorised and issued share capital are set out innote 13 to the attached financial statements.

DIVIDENDSThe following dividends were declared during the year underreview:

2009 2008R’000 R’000

Ordinary dividend number 4051,0 cents, declared 18 April 2007 – 54 603

Ordinary dividend number 4110,6 cents, declared 9 October 2007 – 11 385

Ordinary dividend number 4228,0 cents, declared 11 April 2008 30 094 –

30 094 65 988

RESOLUTIONSNo special resolutions were passed by the Company or itssubsidiaries during the current year.

DIRECTORS AND SECRETARYThe directors in office at the date of this report are:

LCZ Cele (independent, non-executive)MPD ConwayJTM Edwards (independent, non-executive)L Gadd (non-executive)

SK JacksonVP Khanyile (non-executive)JD McIntosh (chief executive officer)RTAC NethercottM Zimmerman (non-executive chairman)JW Alderslade (alternate to VP Khanyile)

CL Odendaal resigned as a director with effect from 31 October 2008.

The executive directors represent the key management of theCompany and the Group.

Messrs JTM Edwards and SK Jackson retire by rotation at theforthcoming annual general meeting but, being eligible, offerthemselves for re-election. Brief curricula vitae of Messrs JTM Edwards and SK Jackson appear in the Notice of Meeting.

The secretary of the Company is SK Jackson, whose business andpostal addresses are:

Business Postal1 Wilton Crescent PO Box 1033Umhlanga Ridge Umhlanga Rocks4319 4320

DIRECTORS’ SHAREHOLDINGSDetails of the directors’ direct and indirect shareholdings in theCompany are reflected on page 56.

There has been no change in directors’ shareholdings betweenthe financial year-end and the date of this report.

SUBSIDIARIESFull details of subsidiaries are set out on page 54.

The results of the subsidiaries, so far as concerns the Company,comprise aggregate income and losses for the year, aftertaxation, of R16 506 000 (2008: R130 001 000) and R50 277 882(2008: R1 559 000) respectively.

AUDITORPricewaterhouseCoopers Inc. will continue in office in accordancewith section 270(2) of the Companies Act, 1973.

SUBSEQUENT EVENTSNo fact or circumstance material to an appreciation of thesefinancial statements has occurred between the financial year-endand the date of this report.

Durban17 April 2009

Segment Information


2009 2008TOTAL R’000 % R’000 %

Revenue 6 581 641 100 8 811 995 100

Operating profit 46 378 100 212 237 100Net 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 100Total liabilities 1 516 815 100 1 763 008 100Number of employees 2 418 100 2 829 100Expenditure on plant and equipment 33 945 100 35 458 100Depreciation 24 766 100 24 296 100Goodwill acquired 227 100 172 100Goodwill impaired 21 572 100 10 400 100Goodwill at year-end 123 001 100 144 346 100

2009 2008CAR HIRE R’000 % R’000 %

Revenue 258 509 4 219 789 2

Operating profit (1 020) (2) 9 790 4Net finance costs 2 832 (9) (1 737) 4


Total assets 452 230 23 485 786 22Total liabilities 466 579 31 513 978 29Number of employees 293 12 278 10Expenditure on plant and equipment 4 621 14 3 310 9Depreciation 2 390 10 1 672 7Goodwill acquired – – – – Goodwill impaired – – – –Goodwill at year-end – – – –

2009 2008RETAIL MOTOR R’000 % R’000 %

Revenue 6 065 942 92 8 132 421 92

Operating profit 42 347 91 163 797 77Net 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 53Total liabilities 739 542 49 848 495 48Number of employees 2 005 83 2 386 84Expenditure on plant and equipment 27 982 82 28 314 80Depreciation 20 175 81 19 351 80Goodwill acquired 227 100 – –Goodwill impaired 17 029 79 7 400 71Goodwill at year-end 98 001 80 114 803 80


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

Revenue 23 277 – 47 417 1

Operating profit 6 453 14 3 785 2Net finance costs 25 111 (75) 46 624 (103)


Total assets 365 613 19 351 238 16Total liabilities 256 513 17 286 149 16Number of employees 58 2 76 3Expenditure on plant and equipment 503 1 413 1Depreciation 447 2 405 1Goodwill acquired – – 172 100Goodwill impaired – – – –Goodwill at year-end – – – –

2009 2008MARINE AND LEISURE R’000 % R’000 %

Revenue 225 753 3 388 503 5

Operating profit (9 268) (20) 10 281 5Net finance costs (582) 2 (7 913) 17

Profit before taxation (9 850) (75) 2 368 1

Total assets 121 698 6 157 356 7Total liabilities 34 706 2 80 409 5Number of employees 59 3 86 3Expenditure on plant and equipment 839 2 3 403 10Depreciation 1 748 7 2 867 12Goodwill acquired – – – –Goodwill impaired 4 543 21 3 000 29Goodwill at year-end 25 000 20 29 543 20

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

Revenue 8 160 – 23 865 –

Operating profit 7 866 17 24 584 12Net finance costs 2 968 (9) 3 828 (8)


Total assets 25 544 1 44 847 2Total liabilities 19 475 1 33 977 2Number of employees 3 – 3 –Expenditure on plant and equipment – – 18 –Depreciation 6 – 1 –Goodwill acquired – – – –Goodwill impaired – – – –Goodwill at year-end – – – –

Balance Sheets at 28 February 2009


Group Company2009 2008 2009 2008

Note R’000 R’000 R’000 R’000

ASSETSNon-current assetsPlant and equipment 4 75 069 71 717 – –Goodwill 5 123 001 144 346 – –Investments 6 146 848 124 379 146 848 124 378Deferred taxation 7 43 535 36 396 – 2 378Investment in subsidiary 8 – – 165 801 294 963

388 453 376 838 312 649 421 719

Current assetsInventory 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 LIABILITIESCapital and reservesShare capital 13 20 509 20 062 20 509 20 062Share-based payment reserve 14 6 186 5 477 6 186 5 477Non-distributable reserve 15 5 896 5 896 5 896 5 896Retained earnings 419 314 441 281 451 164 392 817

Ordinary shareholders’ equity 451 905 472 716 483 755 424 252Minority interest 16 (433) 12 121 – –

Total equity 451 472 484 837 483 755 424 252

Non-current liabilitiesAdvance 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 liabilitiesAdvance 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

Income Statements for the year ended 28 February 2009


Group Company2009 2008 2009 2008

Note R’000 R’000 R’000 R’000

Revenue 21 6 581 641 8 811 995 19 469 84 409Cost of sales (5 483 271) (7 486 603) – –

Gross profit 1 098 370 1 325 392 19 469 84 409Other income 22 3 100 12 698 48 589 3 000Impairment 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 266Investment income 24 17 142 7 218 34 086 14 032Finance costs 24 (50 437) (52 690) (24) –

Profit before taxation 13 083 166 765 101 208 100 298Taxation 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 171Minority interest (6 067) 13 735 – –

2 060 111 908 88 441 96 171

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

Statements of Changes in Equity for the year ended 28 February 2009


AttributableNon- Share- to equitydistri- based holders

Share butable payment Retained of the Minority Totalcapital reserve reserve earnings Company interest equityR’000 R’000 R’000 R’000 R’000 R’000 R’000

GROUPBalance at 28 February 2007 18 757 5 896 4 340 409 096 438 089 12 217 450 306Issue of shares 1 305 1 305 1 305Net profit 98 173 98 173 13 735 111 908Share-based payment reserve 1 137 1 137 1 137Dividends 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 837Issue of shares 447 447 447Net profit 8 127 8 127 (6 067) 2 060Share-based payment reserve 709 709 709Dividends 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

COMPANYBalance at 28 February 2007 18 757 5 896 4 340 362 634 391 627Issue of shares 1 305 1 305Net profit 96 171 96 171Share-based payment reserve 1 137 1 137Dividends paid (65 988) (65 988)

Balance at 29 February 2008 20 062 5 896 5 477 392 817 424 252Issue of shares 447 447Net profit 88 441 88 441Share-based payment reserve 709 709Dividends paid (30 094) (30 094)

Balance at 28 February 2009 20 509 5 896 6 186 451 164 483 755

Cash Flow Statements for the year ended 28 February 2009


Group Company2009 2008 2009 2008

Note R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATING ACTIVITIESCash receipts from customers 6 642 852 8 814 882 19 469 84 409Cash 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 336Investment income 24 17 142 7 218 34 086 14 032Finance 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 ACTIVITIESPurchase 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 ACTIVITIESAdvance from associate company (47) (23) – –Advance from minority 31 (31 508) (28 549) – –Proceeds of issue of shares 447 1 305 447 1 305Interest-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

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


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES1.1 Basis of preparation

The annual financial statements and consolidated annual financial statements have been prepared in accordance withInternational Financial Reporting Standards (“IFRS”) and in the manner required by the Companies Act of South Africa. Thefinancial 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 GroupNo standards, amendments and interpretations which became effective for the year ended 28 February 2009 have an impacton 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 notrelevant 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 consolidationInvestment in subsidiariesSubsidiaries are those entities in which the Group has an interest of more than one-half of the voting rights or has the powerto 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 onwhich control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost ofan acquisition is measured as the fair value of the assets received, shares issued and liabilities undertaken at the date ofacquisition, plus costs directly attributable to the acquisition. Identifiable assets acquired, and liabilities and contingentliabilities assumed, in a business combination are measured initially at their fair values at the acquisition date, irrespective ofthe 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 directlyin 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 companiesAssociate companies are entities in which the Group has between 20% and 50% of the voting rights, or over which theGroup has significant influence, but does not control. Investments in associate companies are accounted for using the equitymethod 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-acquisitionprofits or losses of associate companies is recognised in the income statement and its share of post-acquisition movementsin reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amountof the investment. Unrealised gains on transactions between the Group and its associate companies are eliminated to theextent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidenceof an impairment of the asset transferred. When the Group’s share of losses in an associate company equals or exceeds itsinterest in the associate, the Group does not recognise further losses unless the Group has incurred obligations, issuedguarantees, 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 interestsMinority interest is valued at the minorities’ portion of the acquiree’s identifiable assets, liabilities and contingent liabilities atthe 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.


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.



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.


1.13 Financial liabilitiesThe Group has the following financial liabilities:

Trade and other payables: these are initially measured at fair value less transaction costs and subsequently stated at amortisedcost. 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 theGroup becomes party to the contractual provisions. Borrowings are subsequently stated at amortised cost, using the effectiveinterest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised asfinance 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 liabilityfor 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 benefitsPensionThe Group provides retirement benefits for its employees through a number of defined contribution plans. A definedcontribution plan is a pension plan under which the Group pays a fixed contribution to a separate entity and has no legalor constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees thebenefits relating to their employment service.

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

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

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

Equity compensation plansShare options are granted to key employees. Options are granted at a discount varying between 0% and 20% of the marketprice of the shares on the date of the grant and are exercisable at that price. The options have a contractual service term offive years and may be exercised in tranches over the period. When the options are taken up the proceeds are credited toshare capital. Costs incurred in administering the scheme are expensed as incurred. The fair value of the employee servicesreceived in exchange for the grant of options or shares is recognised as an expense. The total amount to be expensedrateably over the vesting period is determined by reference to the fair value of the options or shares determined at the grantdate, 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 exercisableor the number of shares that the employee will ultimately receive. This estimate is revised at each balance sheet date andthe difference is charged or credited to the income statement, with a corresponding adjustment to equity. The proceedsreceived on exercise of the options, net of any directly attributable transaction costs, are credited to equity.

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

The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are lessthan 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. Theincrease in the provision due to the passage of time is recognised as interest expense.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued1.16 Revenue recognition

Group revenue comprises revenue from trading activities after deducting value-added tax, and after eliminating sales withinthe Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the entity and the risks and rewards of ownership have been transferred to the customer. Theretail motor division eliminates revenue arising from the sale of pre-owned vehicles to the wholesale motor trade. Revenuecomprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary courseof business. Due to the short time frame of car hire and workshop contracts, generally two days, revenue from the renderingof 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 paidDividends paid are recorded in the financial statements during the period in which they are approved by the board ofdirectors and ratified by shareholders.

1.18 Segment reportingThe various business segments of the Group are each subject to risks and returns that are different from other businesssegments. The principal business segments identified within the Group are retail motor, car hire, marine and leisure, andfinancial 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 betweensegments 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 Africaonly.

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

– claims incurred comprise claims and related expenditure paid in the year and changes in the provision for outstandingclaims 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 yettaken 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 leasesOperating leases are those where substantially all the risks and rewards of ownership are retained by the lessor. Paymentsmade 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 leasesThe Group leases certain vehicles. Leases of vehicles where the Group has substantially all the risks and rewards of ownershipare classified as finance leases. Finance leases are capitalised when the lease commences, at the lower of the fair value ofthe 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 financebalance outstanding. The corresponding lease obligations, net of finance charges, are included in “trade and otherpayables”. The interest element of the finance cost is charged to the income statement over the lease period so as to producea constant periodic rate of interest on the remaining balance of the liability for each period. The vehicles acquired underfinance leases are depreciated over the shorter of the useful life of the asset and the lease term.


2. FINANCIAL RISK MANAGEMENTThe Group’s activities expose it to a variety of financial risks. The Group’s overall risk management programme focuses on theunpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Riskmanagement 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 providesprinciples 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 riskInterest rate exposures are reviewed regularly. The Group is exposed to interest rate risk on its investments and borrowingfacilities, 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 riskThe Group has no significant foreign currency risk. The balances arising on material transactions denominated in foreigncurrencies are immediately hedged through the use of forward exchange contracts. At 28 February 2009, the Group had noaccounts 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 riskThe Group’s credit risk lies principally in its trade receivables. These comprise a large, wide-spread customer base and regularcredit assessments of customers are conducted. All amounts receivable are subject to the Group’s standard credit terms andare 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 riskThe Group has no direct exposure to any equity price risk.

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

2009 2008R’000 R’000

Cash resources, excluding those held by insurance underwriters 186 766 178 667Unutilised 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 providereturns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the costof 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.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES3.1 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. Theestimates will, by definition, rarely equal the actual results achieved. The estimates and associated assumptions are based onhistorical experience and various other factors that are believed to be reasonable under the circumstances, the results ofwhich form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparentfrom other sources. The estimates and judgements that have a significant risk of causing a material adjustment to thecarrying amounts of assets and liabilities are discussed below.

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

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

The value-in-use calculation uses estimates and assumptions made by management. Management determines budgetedoperating 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 instrumentsThe valuation of derivative financial instruments is based on the market situation at the balance sheet date. The value ofthese derivative instruments fluctuates on a daily basis and the actual amounts realised may differ materially from the valueat which they are reflected on the balance sheet (refer to note 1.7).

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

3.5 Accounting for investments in special purpose entitiesThe Group has applied SIC 12, “Consolidation – Special Purpose Entities” in determining whether to consolidate itsinvestment in Main Street 445 (Pty) Limited. The Group has not consolidated Main Street 445 (Pty) Limited on the basis thatit 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.


4. PLANT AND EQUIPMENT4.1 Details of plant and equipment are:

Leasehold Furnitureimprove- Plant and and office Motor

Total ments machinery equipment vehiclesR’000 R’000 R’000 R’000 R’000

GROUPAt 28 February 2009Cost 156 560 17 360 42 121 86 554 10 525Accumulated 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 2008Cost 141 405 13 730 36 599 80 487 10 589Accumulated depreciation (69 688) (2 285) (19 158) (42 937) (5 308)

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

COMPANYNil

4.2 Reconciliation of movement GROUPNet book value – 28 February 2007 69 441 9 632 16 377 37 576 5 856Additions 35 458 7 154 7 693 17 939 2 672Disposals (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 281Additions 33 945 5 406 10 469 15 302 2 768Disposals (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 replacementof plant and equipment. No portion of this was committed at year-end. This amount will be financed from existing cashresources.

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



Group2009 2008

R’000 R’000

5. GOODWILL5.1 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 574Amounts paid during year 227 172Amounts 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”). Thecarrying 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 withattributable goodwill, the budgets contained little or no sales volume growth, with expected improved cash flows arisingfrom reduced operating expenses and working capital requirements. In respect of the forecast period after year one, growthof 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 chargeof 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 amaterial impact on the outcomes.

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


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

6. INVESTMENTS6.1 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) Limitedcomprises 124 387 “C” redeemable cumulativepreference shares of R0,00001 each issued at apremium of R999,99999 each. The preference sharesaccrue a semi-annual dividend providing a dividendyield to the holder on the unredeemed capital andaccrued dividends equivalent to 85% of the primeoverdraft rate.

6.2 Investment in associate company

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

At end of year – 1 – –

The investment comprised:

Cost of shares– Thebe-National Car Rental (Pty) Limited – 1 – –

– 1 – –

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

Total investments 146 848 124 379 146 848 124 378

6.3 Advance from associate company – 47 – –



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

7. DEFERRED TAXATION7.1 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 378Assessed 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 balance28 February movement 29 February movement 28 February

2009 2009 2008 2008 2007R’000 R’000 R’000 R’000 R’000

Impairment of receivables 2 394 175 2 219 354 1 865Lease liabilities 24 812 2 998 21 814 3 402 18 412Taxation allowances (2 720) 3 396 (6 116) 669 (6 785)Accruals and provisions 7 760 (4 404) 12 164 518 11 646Secondary taxation 337 (3 004) 3 341 3 069 272Assessed losses 9 042 8 426 616 404 212Receipts in advance 1 953 (2 452) 4 405 (2 269) 6 674Prepayments (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 notprobable that future taxable profit will be earned in the subsidiaries concerned.


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

8. INVESTMENT IN SUBSIDIARY8.1 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 subsidiariesis stated on page 54.

8.3 The amount owing by subsidiary is unsecured, earnsinterest at 2% above the prime overdraft rate and hasno fixed repayment terms. Of the prior year balance,R155 820 000 earned interest at 2% above the primeoverdraft rate and the balance was interest-free.

8.4 Costs of impairment of investments in subsidiaries arecharged 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. INVENTORY9.1 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 securityfor 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 andthe corresponding liability is included under trade payables.



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

10. TRADE AND OTHER RECEIVABLES10.1 Trade receivables 149 825 211 036

Less: impairment (8 550) (7 926)

141 275 203 110Other 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 amountsare subject to the Group’s standard credit terms andare due within a maximum of 30 days after year-end.No interest is charged on these accounts and thereare no significant concentrations of credit risk.

10.3 The carrying value of trade and other receivablesapproximates 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-endOverdue by less than 60 days 21 236 28 831

Past due and impaired at year-end 16 889 14 242Impairment 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 433Written 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 debtsfor the year has been included under “selling andadministration expenses” in the income statement.

11. DERIVATIVE FINANCIAL ASSETSForward foreign exchange contracts – 6 372 – –

12. CASH AND CASH EQUIVALENTSBank balances, net of overdrafts 186 766 178 667 172 949 2 095Held 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%.


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

13. SHARE CAPITAL13.1 Preference share capital

Authorised1 032 400 7,5% “C” redeemable cumulative preferenceshares of R1 each.

IssuedNil shares.

13.2 Ordinary share capitalAuthorised143 590 560 ordinary shares of no par value.

IssuedAt beginning of year – 107 405 000 shares 20 062 18 757 20 062 18 757During 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 thedirectors until the forthcoming annual general meetingin terms of section 221 of the Companies Act.

13.4 During 2001 shareholders approved the introductionof an employee share incentive scheme. In terms ofthe scheme 20% of the Company’s issued shares, lessthose shares that are subject to the terms andconditions of the Combined Motor Holdings LimitedShare Trust, were made available to issue toemployees as option shares. Share options whichhave been granted to date, and which vest intranches over a five-year period of employment, netof 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 297Granted 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



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

14. SHARE-BASED PAYMENT RESERVE14.1 During October 2004, the Group granted 12

employees the option to acquire a total of 4 350 000shares at R5,12 per share. All the options wereexercised immediately but will only vest in theemployees in tranches over a five-year period ofemployment.

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

Outstanding at beginning of year 3 740 3 920 3 740 3 920Taken 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 statementsfor share-based payment transactions are as follows(‘000 shares):

Balance at beginning of year 5 477 4 340 5 477 4 340Charged 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 years30% after four years40% 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


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

15. NON-DISTRIBUTABLE RESERVECapital redemption reserve 5 896 5 896 5 896 5 896

16. MINORITY INTEREST16.1 Advance from minority shareholders

Non-current portion 224 792 252 317Current portion 20 821 18 407

245 613 270 724Share 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 407Years 2 – 5 99 505 104 331Years 6+ 125 287 147 986

245 613 270 724

The carrying value of the borrowings approximatestheir fair value.

17. INTEREST-BEARING BORROWINGS17.1 Interest-bearing borrowings

Non-current portion 3 670 5 314Current 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 524Years 2 – 5 3 670 5 314

5 398 6 838

The carrying value of the borrowings approximates their fair value.



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

18. ASSURANCE FUNDSUnderwriting activities are conducted through specialpurpose entities on commercial terms and conditions andat 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 LIABILITIESAt beginning of year 77 905 63 491Movement 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 PAYABLES20.1 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 duewithin 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 atrates varying between 13,5% and 15,0% (2008: 12,0% and 14,0%) per annum for the period they are outstanding inexcess 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). Hadthe South African Rand been 5% weaker or stronger against the US Dollar at year-end, the profit before taxation for theyear would have been lower or higher by R280 000 (2008: R2 535 000).

Vehicle OnerousTotal 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 778Utilised during year (3 709) (3 709) –

At 28 February 2009 4 199 2 421 1 778


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

21. REVENUERevenue is derived from the various segments of thebusiness 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 INCOMECapital 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 000Valuation 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 interestsin subsidiaries to a newly-formed subsidiary, CMHHoldings (Proprietary) Limited. The sale, on loanaccount, is classified as a “common control”transaction in terms of IFRS 3 – Business Combinations,and, as such, the capital profit arising cannot berecognised until such time as the loan account isrepaid. The capital profit recorded in the current yearrepresents the extent to which the loan account wasrepaid. The profit is eliminated in the consolidatedannual financial statements.

23. EXPENSES BY NATURECost of sales and other costs 5 877 413 7 930 265 168 6Employee benefit expense (note 23.1) 431 797 467 584 709 1 137Depreciation 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



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

23. EXPENSES BY NATURE continued23.1 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 remunerationFees 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 COSTSInterest 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. TAXATION25.1 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 taxationStatutory rate 28,0 29,0 28,0 29,0

Adjusted for:Disallowable expenditure 49,6 2,0 – 0,3Exempt 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


Group2009 2008

R’000 R’000

26. EARNINGS PER SHARE26.1 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 upby employees, the earnings and headline earnings per share will be diluted.

The number of shares used to calculate the diluted earnings and headline earningsper share is determined by adding to the existing shares in issue the number of sharesthat could have been purchased using the value representing the discount betweenthe price at which the option shares were granted and the year-end value of theexisting 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 195Adjustment for option shares – 2 230

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

26.3 Reconciliation of headline earningsNet 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 768Minority shareholders (2 844) 14 899

23 546 119 667



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

27. CASH GENERATED FROM OPERATIONSOperating 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 137Depreciation 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 ofacquisitions 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 PAIDAmounts 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 PAIDTaxation paid is reconciled to the amounts disclosed in theincome 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)


Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

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

Carrying value at the date of disposal of the assets(excluding cash and cash equivalents) and liabilitiesdisposed 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 MINORITIESRepayment of loans (26 110) (14 955) – –Payment of dividends (5 398) (13 594) – –

(31 508) (28 549) – –

32. RELATED PARTY TRANSACTIONS32.1 During the year a number of subsidiary companies

occupied properties which are owned directly orindirectly 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 andconditions of the rental agreements approximatethose available in the open market.

32.2 Transactions conducted with subsidiary companiesduring 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



Group Company2009 2008 2009 2008

R’000 R’000 R’000 R’000

33. COMMITMENTSOperating lease commitments.The future minimum lease payments under non-cancellableoperating 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 INFORMATION34.1 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 ofemployees 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 governedby 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 topay further contributions if the funds do not hold sufficient assets to pay all employees the benefits relating to theiremployment service.

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

35. CONTINGENT LIABILITIESIn support of the BEE transaction concluded with Thebe Investment Corporation (Proprietary) Limited, the Company has givencertain undertakings on the occurrence of an event of default under the terms and conditions of the A-class and B-class preferenceshares 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 theshares 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 sharesto 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 ofthe opinion that no material loss will arise as the result of these undertakings.


36. STANDARDS, AMENDMENTS AND INTERPRETATIONS OF EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE AND HAVE NOTBEEN EARLY ADOPTED BY THE GROUPThe following interpretations to existing standards have been published that are mandatory for the Group’s future accountingperiods 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 overallrequirements for the presentation of financial statements, guidelines for their structure and minimum requirements for theircontent. The Group will apply IAS 1 (Revised) from 1 March 2009. The Group assessed the impact of IAS 1 and concludedthat 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 proposalsmade in its annual improvements project. The annual improvements project provides a vehicle for making non-urgent butnecessary 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 anddepreciated to their residual values over the expected period of use. The Group will apply IAS 16 (Revised) from 1 March2009. The Group assessed the impact of IAS 16 and concluded that it will only affect the format and extent of disclosurespresented.

– IAS 39 (Amendment), “Financial Instruments: Recognition and Measurement” and IFRS 7 (Amendment), “FinancialInstruments: 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 forreclassification. The Group assessed the impact of IAS 39 and concluded that it will have an insignificant impact on the resultsof 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’sproducts and services, the geographical area in which it operates, and its major customers. The Group assessed the impactof 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 amultiple-element arrangement and the consideration receivable from the customer is allocated between the components ofthe 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 OPERATIONSThe following standards, amendments and interpretations to existing standards have been published that are mandatory for theGroup’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”

Issued Indebtednessshare Effective holding by

capital Activity (indirect)/direct Shares at cost subsidiaries2009 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 962CMH 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 motor2 – financial services3 – car hire4 – marine and leisure5 – corporate services/other6 – dormant /deregistered in current year

3. No business of a subsidiary was managed by a third party during the year under review.

Subsidiaries


Directors’ Emoluments


Executive directorsMPD SK JD RTAC CL M

Total Conway Jackson McIntosh Nethercott Odendaal ZimmermanR’000 R’000 R’000 R’000 R’000 R’000 R’000

2009Salary 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 –

2008Salary 11 928 1 860 2 250 2 620 1 860 1 965 1 373Fringe benefits 1 049 175 175 175 175 175 174Contributions 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 directorsLCZ JTM L VP M

Total Cele Edwards Gadd Khanyile ZimmermanR’000 R’000 R’000 R’000 R’000 R’000

2009Fees 1 652 105 179 84 84 1 200Fringe benefits 181 – – – – 181Contributions to medical aid fund 58 – – – – 58

1 891 105 179 84 84 1 439

2008Fees 867 67 160 56 84 500

Notes1. 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.

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

Beneficial shareholding at29 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 yearOption shares ex

CMH Share Incentive Scheme– direct 75 – – – – – 75 – –

Other– direct 5 5– indirect 517 517 – – – – – – –

597 522 – – – – 75 – –

Shares disposed of during year– direct 957 506 – – – – 451 – –– indirect – – – – – – – – –

Retirement of director 139 – – – – – 139 – –

1 096 506 – – – – 590 – –

Beneficial shareholding at28 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 – – –

2 525 338 – 787 1 012 388 – – –

Directors’ Shareholding


Analysis of Ordinary Shareholders


Number of Number of Percentage ofshareholders shares held (000’s) shares held

2009 2008 2009 2008 2009 2008

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

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

Holdings1 – 2 500 289 298 254 280 0,2 0,3

2 501 – 5 000 76 73 277 273 0,3 0,25 001 – 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 28,9Non-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.

Stock Exchange Performance


Certification by the Company Secretary

2009 2008

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

I certify, in accordance with section 268G(d) of the Companies Act, that the Company has lodged with the Registrar of Companies allsuch 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 secretary17 April 2009

Administration


Shareholders’ Diary

REGISTRATION NUMBERS

Company registration number: 1965/000270/06

Share code: CMH

ISIN number: ZAE000088050

DIRECTORS

LCZ Cele, BCom, Postgrad Dip Tax, MAcc (Tax) (Independent,

non-executive)

MPD Conway, CA (SA)

JTM Edwards, CA (SA) (Independent, non-executive)

L Gadd, MA Hons (Social Sciences) (Non-executive)

SK Jackson, BCom (Hons) (Tax Law), CA (SA)

VP Khanyile, BCom (Hons) (Non-executive)

JD McIntosh, CA (SA)

RTAC Nethercott

M Zimmerman (Non-executive)

JW Alderslade, CA (SA) (alternate to VP Khanyile)

SECRETARY

SK Jackson

AUDITOR

PricewaterhouseCoopers Inc.

BANKERSFirst National Bank of Southern Africa

TRANSFER SECRETARIESComputershare Investor Services (Proprietary) LimitedPO Box 61051Marshalltown2107

BUSINESS ADDRESS AND REGISTERED OFFICE1 Wilton CrescentUmhlanga Ridge4319

POSTAL ADDRESSPO Box 1033Umhlanga Rocks4320

SPONSORSPricewaterhouseCoopers Corporate Finance (Proprietary) LimitedPrivate Bag X36Sunninghill2157

FINANCIAL YEAR-END – FEBRUARYAnnual general meeting – May

REPORTSInterim – OctoberAnnual financial statements – May

DIVIDENDSInterim – declared October

– paid DecemberFinal – declared April

– paid June

Notice is hereby given that the twenty-first Annual General Meeting of members of Combined Motor Holdings Limited will be held inthe boardroom at the CMH Head Office located at 1 Wilton Crescent, Umhlanga Ridge, on Thursday, 28 May 2009 commencing at15:30 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 Edwardsand 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 ordinaryresolution:

“That 36 080 560 unissued ordinary shares of no par value be placed under the control of the directors who may, subject tosection 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. Theperson so appointed need not be a member. Proxy forms should be forwarded to reach the registered office of the Company by notlater than 16:00 on 27 May 2009.

By order of the board of directors

SK JacksonSecretary

17 April 2009

CURRICULA VITAEA 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 andrisk 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 theaudit and risk committee and ensuring that the Group maintains a high standard of corporate governance, and is a member of theremuneration 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 isresponsible for the Group's administration, treasury, secretarial and taxation departments. Stuart was last re-elected to office in 2006.

Notice of Meeting

60 CMH Annual Report 2009Designed by

Printed by I

Form of Proxy

COMBINED MOTOR HOLDINGS LIMITEDANNUAL 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 theCompany 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





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 office1 Wilton CrescentUmhlanga Ridge4319

Postal addressPO Box 1033Umhlanga Rocks4320


www.cmh.co.za

Documents

Combined Motor Holdings Limited 2009 Annual Report