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Unaudited consolidated condensed interim results for the six months ended 30 September 2015
SEARDEL INVESTMENT CORPORATION LIMITED
("Seardel" or "the Group" or "the company")
The company's shares are listed under the Personal Goods Sector of the JSE Limited.
Registration number: 1968/011249/06 (Incorporated in the Republic of South Africa)
JSE share code: SER ISIN: ZAE000029815
JSE share code: SRN ISIN: ZAE000030144
UNAUDITED CONSOLIDATED CONDENSED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited* Audited
30 September 30 September 31 March
2015 2014 2015
R000's R000's R000's
ASSETS
Non-current assets 7 767 508 9 478 679 7 624 838
Property, plant and equipment 1 046 905 1 390 665 886 974
Plant and equipment 356 619 732 642 238 285
Owner-occupied property 690 286 658 023 648 689
Investment property - 690 340 -
Intangible assets 2 718 368 2 923 898 2 750 263
Goodwill 3 737 528 3 882 514 3 737 528
Equity-accounted investees 207 459 240 673 206 985
Other investments - 3 644 -
Long-term receivables 10 014 249 881 2 935
Deferred tax assets 47 234 97 064 40 153
Current assets 1 382 541 2 794 053 1 166 181
Inventories 18 461 695 858 18 090
Programming rights 612 032 419 946 431 169
Trade and other receivables 603 697 1 359 014 591 536
Current tax assets 35 203 13 892 12 409
Cash and cash equivalents 113 148 305 343 112 977
Assets of disposal groups 234 735 54 437 249 405
Total assets 9 384 784 12 327 169 9 040 424
EQUITY AND LIABILITIES
Total equity 7 325 774 8 869 558 7 131 929
Stated capital/Share capital and share premium 6 762 797 6 665 382 6 665 383
Treasury shares - (17 794) -
Reserves (497 025) 999 706 (595 481)
Equity attributable to owners of the company 6 265 772 7 647 294 6 069 902
Non-controlling interest 1 060 002 1 222 264 1 062 027
Non-current liabilities 964 526 1 236 929 1 068 963
Deferred tax liabilities 460 010 471 015 465 531
Post-employment medical aid benefits - 91 055 -
Borrowings 504 516 550 774 501 001
Share-based liabilities - 122 465 102 431
Operating lease accruals - 1 620 -
Current liabilities 1 072 143 2 220 682 814 653
Current tax liabilities 3 937 13 915 12 398
Post-employment medical aid benefits - 6 205 -
Current portion of borrowings 373 878 273 718 339 082
Trade and other payables 692 694 1 143 869 461 918
Bank overdraft 1 634 782 975 1 255
Liabilities of disposal groups 22 341 - 24 879
Total liabilities 2 059 010 3 457 611 1 908 495
Total equity and liabilities 9 384 784 12 327 169 9 040 424
Net asset value 6 265 772 7 647 294 6 069 902
Net asset value per share after treasury
shares (cents) 141 177 141
* 30 September 2014 restated.
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
6 Months 6 Months* Audited
30 September 30 September 31 March
2015 2014 % 2015
R000's R000's change R000's
Continuing operations
Revenue 1 146 030 1 180 852 (2,9) 2 396 385
Cost of sales (530 018) (473 533) 11,9 (985 787)
Gross profit 616 012 707 319 (12,9) 1 410 598
Other income 96 975 17 950 440,3 56 744
Administrative and other expenses (458 151) (416 167) 10,1 (872 761)
Earnings before interest, taxation,
depreciation and amortisation 254 836 309 102 (17,6) 594 581
Depreciation, amortisation and impairments (94 455) (93 221) 1,3 (188 020)
Operating profit 160 381 215 881 (25,7) 406 561
Finance income 2 989 8 254 (63,8) 14 350
Finance expenses (21 965) (36 035) (39,0) (55 306)
Share of loss of equity-accounted investees,
net of taxation (200) (832) (76,0) (756)
Profit before taxation 141 205 187 267 (24,6) 364 849
Taxation (21 054) (89 959) (148 248)
Profit for the period from continuing operations 120 151 97 308 23,5 216 601
Discontinued operations
(Loss)/profit for the period from discontinued
operations, net of taxation (6 465) 536 (64 431)
Profit for the period 113 686 97 844 16,2 152 170
Other comprehensive income, net of
related taxation
Items that are or may be reclassified to
profit or loss
Foreign operations - foreign currency
translation differences 66 153 (5 203) 22 728
Other comprehensive income/(loss), net
of taxation 66 153 (5 203) 22 728
Total comprehensive income for the year 179 839 92 641 174 898
Profit attributable to:
Owners of the company 75 568 55 642 124 813
Non-controlling interest 38 118 42 202 27 357
113 686 97 844 152 170
Total comprehensive income attributable to:
Owners of the company 118 994 52 279 139 733
Non-controlling interest 60 844 40 362 35 165
179 839 92 641 174 898
* 6 Months ended 30 September 2014 restated.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
30 September 30 September
2015 2014
R000's R000's
Net cash flow from operating activities 197 690 (240 597)
Net cash flow from investing activities (232 165) (686 753)
Net cash flow from financing activities 36 910 826 690
Net change in cash and cash equivalents 2 435 (100 660)
Cash and cash equivalents at the beginning of the year 130 125 (376 972)
Cash and cash equivalents at the end of the year 132 560 (477 632)
Cash and cash equivalents 113 148 305 343
Bank overdraft (1 634) (782 975)
Cash of disposal groups held for sale 21 046 -
Cash and cash equivalents at the end of the year 132 560 (477 632)
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Treasury Other Retained
capital shares reserves income
R'000 R'000 R'000 R'000
Balance 31 March 2014 1 692 429 (17 794) 213 202 726 226
Profit - - - 124 813
Other comprehensive income - FCTR - - 14 920 -
Share incentive scheme - - - 4 174
Dividends - - - -
Share options 11 503 - - (11 194)
Rights issue 4 961 451 - - -
Treasury shares - 17 794 - (17 794)
Dividend through demerger - - (212 058) (1 467 924)
Effect of change in ownership
- minority interests - - - 37 152
Change in ownership - minority
interest acquired - - - (6 998)
Acquisition of subsidiaries
with NCIs - - - -
Balance 31 March 2015 6 665 383 - 16 064 (611 545)
Profit - - - 75 568
Other comprehensive income - FCTR - - 43 426 -
Share transaction with minority
shareholders 97 414 - 2 029 (20 394)
Change in ownership - minority
interest acquired - - - (2 173)
Balance 30 September 2015 6 762 797 - 61 519 (558 544)
Non-
Equity controlling Total
owners interest equity
R'000 R'000 R'000
Balance 31 March 2014 2 614 063 1 230 078 3 844 141
Profit 124 813 27 357 152 170
Other comprehensive income - FCTR 14 920 7 808 22 728
Share incentive scheme 4 174 - 4 174
Dividends - (70 192) (70 192)
Share options 309 - 309
Rights issue 4 961 451 - 4 961 451
Treasury shares - - -
Dividend through demerger (1 679 982) 179 (1 679 803)
Effect of change in ownership
- minority interests 37 152 (135 828) (98 676)
Change in ownership - minority
interest acquired (6 998) (1 002) (8 000)
Acquisition of subsidiaries with NCIs - 3 627 3 627
Balance 31 March 2015 6 069 902 1 062 027 7 131 929
Profit 75 568 38 118 113 686
Other comprehensive income - FCTR 43 426 22 727 66 153
Share transaction with minority shareholders 79 049 (65 042) 14 007
Change in ownership - minority interest acquired (2 173) 2 173 -
Balance 30 September 2015 6 265 772 1 060 002 7 325 775
HEADLINE EARNINGS
Unaudited Unaudited
30 September 30 September
2015 2014
R000's R000's
Earnings (loss) attributable to equity owners of the parent 75 568 55 642
IAS 16: Gains on Disposal of Plant and Equipment - (2 428)
IAS 16: Loss on Disposal of Plant and Equipment 3 995 -
IAS 16: Impairment of Plant and Equipment (980) -
IFRS 3: Gain on Bargain Purchase - (1 639)
IAS 28: Gain on Disposal of Associates (3 199) -
Total tax effect of adjustments (844) 647
Headline earnings 74 540 52 222
STATISTICS PER SHARE
Unaudited Unaudited*
30 September 30 September
2015 2014
Basic earnings (R'000)
Earnings (R'000) 75 568 55 642
Continuing operations (R'000) 82 033 55 106
Discontinued operations (R'000) (6 465) 536
Headline earnings (R'000) 74 540 52 222
Continuing operations (R'000) 85 878 51 686
Discontinued operations (R'000) (11 338) 536
Basic earnings per share
Earnings (cents) 1,75 1,42
Continuing operations (cents) 1,90 1,41
Discontinued operations (cents) (0,15) 0,01
Headline earnings (cents) 1,72 1,33
Continuing operations (cents) 1,98 1,32
Discontinued operations (cents) (0,26) 0,01
Weighted average number of shares in issue ('000) 4 330 446 3 905 028
Actual number of shares in issue at end of
the period (net of treasury shares) ('000) 4 457 376 4 318 212
Diluted earnings per share
Earnings (cents) 1,75 1,42
Continuing operations (cents) 1,90 1,41
Discontinued operations (cents) (0,15) 0,01
Headline earnings (cents) 1,72 1,33
Continuing operations (cents) 1,98 1,32
Discontinued operations (cents) (0,26) 0,01
Diluted weighted average number of shares in issue ('000) 4 330 446 3 929 671
* 6 Months ended 30 September 2014 restated.
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
BASIS OF PREPARATION
The unaudited consolidated condensed results for the six months to September 2015 have
been prepared in accordance with International Financial Reporting Standards ("IFRS"),
the disclosure requirements of IAS 34, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee, the requirements of the South African Companies
Act, 2008, and the Listings Requirements of the JSE Limited. These results do not
include all the information required for a complete set of IFRS financial statements.
However, selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the Group's financial position
and performance since the last annual consolidated financial statements as at and for
the year ended 31 March 2015.
These results have been prepared under the supervision of the Financial Director,
A S Lee (CA) SA, and have not been audited or reviewed by the Group's auditors,
Grant Thornton Johannesburg Partnership.
SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated condensed results have been prepared under the historical
cost convention, except for the revaluation of financial instruments. The accounting
policies adopted are consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 31 March 2015.
RESTATEMENT OF PRIOR PERIOD RESULTS
During the last financial year the Group changed the accounting policy as it relates to
owner-occupied buildings, from initially being recognised at cost and subsequently
revalued to approximate fair value, to now the cost convention whereby owner-occupied
buildings are being initially recognised at cost and subsequently measured at cost
less accumulated depreciation and any impairment losses. The adjustments in respect
of the measurement change were not treated as movements in the prior financial year,
but as adjustments to the comparative unaudited consolidated statement of financial
position as at 30 September 2014. The comparative results were restated as follows:
Previously Change in
R'000 reported policy Restated
Impact of changes in accounting policy
on consolidated statement of financial
position on 30 September 2014:
Non-current assets
Property, plant and equipment 758 646 (100 623) 658 023
Deferred tax assets 89 554 7 510 97 064
Equity
Equity attributable to equity holders
of the parent 1 084 419 (84 713) 999 706
Non-controlling interest - - -
Non-current liabilities
Deferred tax liabilities 479 415 (8 400) 471 015
ISSUE OF SHARES
On 14 September 2015, 139 163 777 N ordinary shares were issued in respect of a share
swap with minority shareholders for ordinary shares of Sabido Investments Proprietary
Limited.
DISCONTINUED OPERATIONS
Following a decision to exit the business of e.Botswana Proprietary Limited and e.tv
Botswana Proprietary Limited, the results of these operations were reclassified to
discontinued operations in the statement of comprehensive income and its assets and
liabilities reclassified to disposal groups held for sale in the statement of financial
position.
A decision was also taken to sell or exit certain subsidiaries and associates of the
Longkloof Limited Group. The results of these operations were classified as discontinued
operations in the statement of comprehensive income and its assets and liabilities
classified as disposal groups held for sale in the statement of financial position.
Following the declaration and finalisation announcement relating to the proposed
unbundling by Seardel of 557 892 317 shares in Deneb Investments Limited ("Deneb") to
its shareholders on 14 November 2014, the results of the non-media operations (Deneb)
were reclassified to discontinued operations in the statement of comprehensive income
and its assets and liabilities in the statement of financial position have been
unbundled on 1 December 2014 in accordance with IFRIC 17: Distributions of Non-cash
Assets to Owners.
Discontinued operations as disclosed in the statement of comprehensive income consist
of the following:
Longkloof Non-media
e.tv subsidiaries assets
R'000 e.Botswana Botswana and associates (Deneb) Total
September 2015
Revenue 2 585 - 15 304 - 17 889
Profit/(loss) after tax 197 - (6 662) - (6 465)
September 2014
Revenue 2 238 - 5 891 1 249 001 1 257 130
Profit/(loss) after tax (667) - (4 168) 5 371 536
Disposal groups held for sale as disclosed in the statement of financial position
comprise the following:
Longkloof Non-media
e.tv subsidiaries assets
R'000 e.Botswana Botswana and associates (Deneb) Total
September 2015
Property, plant
and equipment 1 009 2 270 1 050 - 4 329
Intangible assets - - 174 577 - 174 577
Other assets 3 226 22 52 581 - 55 829
Total assets 4 235 2 292 228 208 - 234 735
Liabilities of disposal group
Deferred taxation liability - (44) (5 448) - (5 492)
Other liabilities (437) 2 (16 414) - (16 849)
Total liabilities (437) (42) (21 862) - (22 341)
September 2014
Property, plant and equipment - - - 54 437 54 437
Total assets - - - 54 437 54 437
Liabilities of disposal group
Total liabilities - - - - -
March 2015
Property, plant
and equipment 1 212 2 233 521 - 3 966
Intangible assets - - 155 973 - 155 973
Investment in associates - - 37 091 - 37 091
Other assets 2 597 17 49 761 - 52 375
Total assets 3 809 2 250 243 346 - 249 405
Liabilities of disposal group
Deferred taxation liability - (40) (5 592) - (5 632)
Other liabilities (282) 2 (18 967) - (19 247)
Total liabilities (282) (38) (24 559) - (24 879)
RELATED PARTIES
The below note is an explanation of transactions and balances with related parties
that have significantly changed from the note in the financial statements for the
period ending 31 March 2015.
Transactions with Hosken Consolidated Investments Limited ("HCI") (ultimate holding
company), entities in which HCI has an interest, SACTWU (shareholder in Seardel),
Remgro Limited ("Remgro") (shareholder in Sabido) and Venfin Media Investments (Pty) Ltd
("Venfin") (a wholly-owned subsidiary of Remgro) are included in the following table:
Income/(expense) transaction values with related parties
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Unbundled assets
SACTWU - disposal of apparel manufacturing
operation - 4 061 5 312
Trade Call Investments Apparel Proprietary
Limited (SACTWU a shareholder) - 380 -
HCI - fees for managerial and secretarial
services paid - (2 165) (2 800)
HCI - working capital loan advanced - - (1 943)
HCI - loan at prime, repayable on demand - 537 3 245
Formex Industries (subsidiary of HCI)
- management fees received - - 864
HCI - fees for risk management received - - 261
Media assets
SACTWU - loan relating to the acquisition of Sabido - (5 987) (5 987)
HCI - preference shares relating to the
acquisition of Sabido - (13 972) (13 972)
HCI - management fees paid (7 458) (7 035) (14 205)
Venfin - management fees paid (844) (796) (1 608)
Longkloof Limited - management fees received - 1 331 1 331
Balances owing (to) by related parties
Unbundled assets
SACTWU - disposal of apparel manufacturing operation - 74 979 -
Trade Call Investments Apparel Proprietary
Limited (SACTWU a shareholder) - (1 810) -
HCI loan at prime, repayable on demand - 69 580 -
Media assets
HCI - working capital loan (8 602) - (8 602)
Venfin - loan relating to the acquisition of
Longkloof Limited (156 605) (156 605) (156 605)
Cape Town Film Studios - associate loan 82 061 68 685 71 786
Dreamworld Management Company - associate loan 10 942 10 524 10 624
Global Media Alliance Broadcasting Limited
- associate loan - 69 836 73 772
CHANGE IN COMPARATIVES
The results of discontinued operations have been separately disclosed on the face of
the statement of comprehensive income. The results of the change in accounting policy
have been separately disclosed in the statement of changes in equity with further
restatement and disclosure in the notes above.
CHANGES IN DIRECTORATE AND COMPANY SECRETARIAL
Mr Mohamed Ahmed has resigned from the board on 14 April 2015. Mr Loganathan Govender
was appointed to the board on 14 April 2015.
Subsequent to 30 September 2015, HCI Managerial Services resigned as company secretary
and Ms Junadi van der Merwe was appointed effective 9 November 2015.
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare an interim dividend for the period ended
30 September 2015.
COMMENTARY
On 1 December 2014, the non-media assets of Seardel were unbundled to shareholders and
separately listed as Deneb Investments Limited on the JSE. The comparative results have
accordingly been adjusted for this transaction and for the prior year, the non-media
assets are reflected in discontinued operations. On 14 September 2015, Seardel increased
its investment in Sabido to 67,7% by acquiring all of the remaining minority
shareholdings in Sabido, with the exception of Venfin Media Investments. The minority
shareholders comprised mainly members of Sabido management and employees, in aggregate
1 226 790 Sabido shares (3,8%). This acquisition was settled by Seardel issuing to the
minority shareholders in aggregate, 139 163 377 N-Shares at a price of R0,70 per N-Share
at a swap ratio of 113,437 Seardel shares for each Sabido share acquired.
At the recent AGM held on 29 October 2015, Seardel shareholders approved the change
of the Company's name to eMedia Holdings Limited. The Company will in due course,
once CIPC and JSE approvals are obtained, trade under this name on the JSE.
In addition to the above, shareholders should note the following items which are
reflected in the results and are important considerations in analysing the overall
financial performance for the period ended 30 September 2015:
a) The Sabido/Seardel swap transaction resulted in the realisation of R88,5 million,
being the share option liability previously raised being recognised through profit
and loss due to certain Sabido options being exercised or cancelled.
b) The amortisation of intangible assets arising on the "At acquisition accounting"
of Sabido amounted to R28,9 million, net of tax, for the six-month period.
This has resulted in the Group recording a profit of R113,7 million compared to a profit
of R97,8 million in the comparative period and a profit attributable to the owners of
the company of R76,1 million compared to a profit of R55,6 million the previous year.
SABIDO
The six-month period under review has been a challenge for Sabido's flagship entity,
e.tv. The adverse economic climate and the decline in market share towards the end of
the last financial year has seen classical advertising revenue remain under continued
pressure, ending the current period R114 million behind the revenue for the prior
comparative period. The launch of the new schedule on 1 March 2015 and the increased
investment in local programming has arrested the decline in market share and management
is pleased to report that audiences have been steadily increasing since March 2015 and
as at August 2015, the available audience is once again reaching levels previously
considered acceptable to e.tv. Due to the lag effect of the revenue share measured
against the increased audience share, this has not been evidenced in the current period
under review but this should be restored soon to ensure a positive impact going forward
in the second half of the fiscal. Despite the increased investment in local programming
and the decline in revenue, e.tv continued to produce a positive result for the period.
Litigation was instituted against The Minister of Communications and Others regarding
the Broadcasting Digital Migration policy which will have an impact on DTT. Although
e.tv lost the application, leave to appeal was granted and e.tv will apply to the
Supreme Court of Appeal to reverse the earlier judgement.
eSat.tv (eNCA) continues to perform well despite a slowdown in the licence fee revenue
received from DStv. It achieved a net profit after tax of R104,8 million during the
current period compared to a net profit after tax of R68,7 million the prior year.
Significant cost savings in the light of renewal negotiations for the contract with
DStv ending on 30 May 2015 has resulted in the increase in profits.
Included in these results are losses of R112,2 million from the continued investment
into the multi-channel businesses from which very little revenue is currently being
derived. The OVHD platform has increased its viewership by more than 110 000 boxes
activated for the six-month period, when compared to approximately 50 000 boxes
activated in the first year of operations. Activations are approximately 25 000 boxes
per month with a total active boxes of approximately 268 000. With this ever improving
roll-out and when DTT starts, the Group will be in a good position to increase its
revenue base.
Certain of the group's other subsidiaries have performed satisfactorily for the
six-month period. These include Sasani Africa, Silverline 360 and Strika Entertainment.
Management is also continuing to review the non-core and peripheral businesses and
will exit these businesses when opportunities present themselves. During the current
period, the sale of Setanta was completed and negotiations are underway for the sale
of Power. Despite the challenging economic environment, management looks forward to
a fruitful six months going forward.
On behalf of the board
T G Govender A S Lee
Acting Chief Executive Officer Financial Director
Cape Town
19 November 2015
CORPORATE INFORMATION
Registration number: 1968/011249/06 (Incorporated in the Republic of South Africa)
JSE share code: SER ISIN: ZAE000029815
JSE share code: SRN ISIN: ZAE000030144
Registered office: 5 Summit Road, Dunkeld West, Johannesburg, 2196
Directors: J A Copelyn* (Chairman), T G Govender (Acting Chief Executive Officer),
A S Lee (Financial Director), E Mphande*^, L Govender*^, R D Watson*^
(* Non-executive ^ Independent)
Company secretary: J van der Merwe
Transfer secretaries: Computershare Investor Services Proprietary Limited,
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditors: Grant Thornton Johannesburg Partnership
Sponsors: Investec Bank Limited
Date: 19/11/2015 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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