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THE COMBRETUM SEED IS PROPAGATED FROM THE MATURE TREE AND SYMBOLISES THE OPPORTUNITY FOR NEW GROWTH. CULLINAN HOLDINGS IS A 96-YEAR OLD COMPANY WHICH, HAVING REACHED MATURITY, IS NOW SHEDDING THE SEEDS FOR NEW GROWTH. RESULTS FOR THE YEAR ENDED 3O SEPTEMBER 1998 * HEADLINE EARNINGS OF R20 MILLION * CASH OF R51 MILLION * ACQUISITION OF THOMPSONS TOURS & TRAVEL GROUP INCOME STATEMENT
AUDITED AUDITED
12 MONTHS 15 MONTHS
ENDED TO
30 SEPTEMBER 30 SEPTEMBER 1998 1997
R'000 R'000
TURNOVER 334 667 317 588 OPERATING INCOME/(LOSS)
- CONTINUING OPERATIONS 17 651 (6 511)
- DISCONTINUED OPERATIONS 2 (17 591)
EXCEPTIONAL ITEMS 1 651 (59 231)
NET OPERATING INCOME/(LOSS) 19 304 (83 333)
INTEREST RECEIVED/(PAID) 2 949 (15 532)
INCOME/(LOSS) BEFORE TAXATION 22 253 (98 865)
TAXATION 62 29
NET INCOME/(LOSS) AFTER TAXATION 22 191 (98 894)
PREFERENCE DIVIDENDS 493 27
NET ATTRIBUTABLE INCOME/(LOSS) 21 698 (98 921) ORDINARY SHARES (000'S)
- IN ISSUE 729 781 620 526 - USED TO CALCULATE PROFIT/(LOSS) AND HEADLINE PROFIT/(LOSS) PER ORDINARY
SHARE (WEIGHTED AVERAGE) 658 042 32 486
INCOME/(LOSS) PER ORDINARY SHARE (CENTS) 3,3 (304,5) HEADLINE INCOME/(LOSS) PER ORDINARY
SHARE (CENTS) 3,1 (122,2) DETERMINATION OF HEADLINE EARNINGS
HEADLINE INCOME/(LOSS) 20 047 (39 690)
EXCEPTIONAL ITEMS 1 651 (59 231)
NET ATTRIBUTABLE INCOME/(LOSS) 21 698 (98 921) SUMMARISED GROUP CASH FLOW STATEMENT
AUDITED AUDITED
12 MONTHS 15 MONTHS
ENDED TO
30 SEPTEMBER 30 SEPTEMBER
1998 1997
R'000 R'000 CASH RETAINED FROM/(UTILISED BY) OPERATING ACTIVITIES
OPERATING INCOME 19 304 (83 333)
DEPRECIATION 6 167 8 890 RESTRUCTURING PROVISIONS AND
EXCEPTIONAL ITEMS 14 421 41 765
OTHER NON-CASH ITEMS (21 935) 11 494
DECREASE IN WORKING CAPITAL 8 944 8 850 CASH GENERATED FROM/(UTILISED BY)
OPERATING ACTIVITIES 26 901 (12 334)
INTEREST RECEIVED 2 949 -
INTEREST PAID - (15 532)
TAXATION PAID (11) (61)
DIVIDENDS PAID - (55)
NET CASH RETAINED/(OUTFLOW) 29 839 (27 982) CASH (UTILISED BY)/GENERATED FROM INVESTMENT ACTIVITIES INVESTMENT TO MAINTAIN OPERATIONS
REPLACEMENT OF FIXED ASSETS (2 353) (3 009)
NET PROCEEDS FROM DISPOSALS 2 330 3 658
PROCEEDS ON DISPOSAL OF SUBSIDIARIES 18 927 - INVESTMENT TO EXPAND OPERATIONS
ADDITIONS TO FIXED ASSETS (5 612) -
ACQUISITION OF SUBSIDIARIES 1 340 3 470
NET CASH GENERATED 14 632 4 119 CASH MOVEMENT ON FINANCING ACTIVITIES
SHAREHOLDERS' FUNDING 20 000 40 025
LONG-TERM LIABILITIES RAISED 2 923 295 PROCEEDS FROM DISPOSAL OF FIXED ASSETS IN
DISCONTINUED OPERATIONS - 42 678
PREFERENCE SHARES REDEEMED (4) - NET CASH INFLOW FROM
FINANCING ACTIVITIES 22 919 82 998
INCREASE IN CASH AND CASH EQUIVALENTS 67 390 59 135 GROUP BALANCE SHEET
AUDITED AUDITED
30 SEPTEMBER 30 SEPTEMBER
1998 1997
R'000 R'000
FIXED ASSETS 42 876 31 683
CURRENT ASSETS 223 341 144 683
INVENTORIES 84 012 74 447
ACCOUNTS RECEIVABLE 87 884 86 181
CASH RESOURCES/(BANK OVERDRAFT) 51 445 (15 945)
TOTAL ASSETS 266 217 176 366
CURRENT LIABILITIES (133 281) (91 078)
132 936 85 288
INTEREST-BEARING TERM LOANS (3 475) (552)
NET ASSETS 129 461 84 736 FINANCED BY:
ORDINARY SHAREHOLDERS' FUNDS 108 415 82 616
PREFERENCE SHAREHOLDERS' FUNDS 21 046 1 050
OUTSIDE SHAREHOLDERS' INTEREST - 1 070
129 461 84 736 FINANCIAL STATISTICS
GEARING (%) - 21,0
CURRENT RATIO 1,7 1,5
NET ASSET VALUE PER SHARE (CENTS) 14,9 13,5 COMMENTS
THE CULLINAN GROUP'S RESULTS FOR THE YEAR REFLECT THE MASSIVE CHANGE IN FORTUNES FROM ITS SITUATION A YEAR AGO. THE HEADLINE EARNINGS OF R20 MILLION FOR THE YEAR IS THE FIRST ANNUAL PROFIT RECORDED FOR CULLINAN SINCE 1990, AND A CASH POSITIVE BALANCE SHEET CAN NOW FUND FURTHER EXPANSION OF THE GROUP. THE MATERIAL HIGHLIGHTS ACHIEVED FOR THE YEAR REFLECT:
* A RETURN TO PROFITABILITY FROM A LOSS OF R100 MILLION IN 1997 TO A PROFIT OF R20 MILLION IN 1998;
* THE ELIMINATION OF DEBT AND THE CREATION OF SUBSTANTIAL CASH BALANCES (BORROWINGS OF R16 MILLION IN SEPTEMBER 1997 WERE CONVERTED TO A CASH BALANCE OF R51 MILLION IN SEPTEMBER 1998);
* THE FINAL SALE AND/OR CLOSURE OF SOME BUSINESSES IN CULLINAN, AND THE RETURN TO PROFITABILITY OF THE TWO REMAINING HISTORICAL CULLINAN BUSINESSES; AND * THE ACQUISITION OF THOMPSONS TOURS & TRAVEL THUS GIVING A NEW AREA FOR EXPANSION.
THE ACQUISITION OF THOMPSONS HAS CREATED A NEW ARM OF TOURISM AND LEISURE. THE CORE FOCUS OF CULLINAN WILL IN FUTURE BE DIRECTED TOWARDS TWO AREAS OF INVESTMENT NAMELY: OUTDOOR LIFESTYLE AND TOURISM AND LEISURE. CULLINAN HOLDINGS LIMITED
OUTDOOR LIFESTYLE TOURISM & LEISURE HISTORICAL CULLINAN
- CADAC - THOMPSONS INBOUND - CULLINAN PRECISION
- MIDMACOR HONDA - THOMPSONS OUTBOUND ENGINEERING
- AFMIT - THOMPSONS TRAVEL - CULLINAN
INDUSTRIAL
PORCELAIN OPERATIONAL REVIEW
THE GROUP ACHIEVED HEADLINE EARNINGS OF R20 MILLION FOR THE YEAR AT AN EARNINGS PER SHARE OF 3,1 CENTS PER SHARE. THIS WAS ACHIEVED THROUGH THE ACQUISITION OF THE PROFITABLE MIDMACOR GROUP ON 30 SEPTEMBER 1997, AND THE RETURN TO
PROFITABILITY OF THE REMAINING CULLINAN BUSINESSES. THE OVERALL PERFORMANCE WAS SATISFACTORY WITH ALL OPERATIONAL DIVISIONS PRODUCING IMPROVED RESULTS. SALES OF BOTH HONDA MOTORCYCLES AND POWER PRODUCTS SHOWED STRONG GROWTH WITH THE RESULTANT GROWTH IN PROFITS. THE RESULTS OF CADAC WERE BELOW THOSE ATTAINABLE HAD THE BUSINESS NOT BEEN MAKING SUBSTANTIAL INVESTMENTS IN EXTERNAL GROWTH OPPORTUNITIES. OPERATIONAL INEFFICIENCIES THEREFORE AFFECTED
PROFITABILITY. CADAC CONTINUES TO INVEST SUBSTANTIALLY IN UPGRADING ITS MANUFACTURING FACILITIES IN ORDER TO IMPROVE EFFICIENCIES, IN NEW PRODUCT DEVELOPMENT FOR INTERNATIONAL MARKETS, AND IN THE DEVELOPMENT OF EXPORT MARKETS. THE RESULTS OF THOMPSONS FOR THE FOUR MONTHS TO 30 SEPTEMBER 1998 WERE IN LINE WITH EXPECTATIONS. PROSPECTS
THE GROUP HAS NOW COMPLETED ITS NECESSARY TRANSFORMATION FOR THE RETURN TO PROFITABILITY AND A SIGNIFICANTLY STRENGTHENED BALANCE SHEET. 1999 IS EXPECTED TO BE A YEAR OF LOW GROWTH IN SOUTH AFRICAN CONSUMER DEMAND. HOWEVER, THE THOMPSONS GROUP IS ONE OF THE LARGEST INBOUND TOURIST OPERATORS IN SOUTH AFRICA. CADAC HAS SPENT YEARS DEVELOPING EXPORT MARKETS, AND MIDMACOR HONDA IS EXPORTING TO AFRICA. THE COMBINATION OF INBOUND TOURISM AND EXPORTED PRODUCTS IS PROVIDING CULLINAN WITH THE ABILITY TO CONTINUE EARNING PROFITS IN SPITE OF A WEAK LOCAL ECONOMY AND CURRENCY. IN ADDITION OPERATING EFFICIENCIES ARE EXPECTED TO IMPROVE.
THE GROUP IS THEREFORE CONFIDENT OF ACHIEVING REAL GROWTH. ANNUAL FINANCIAL STATEMENTS
THESE WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT 14 DECEMBER 1998. DIVIDENDS
NO ORDINARY DIVIDEND HAS BEEN DECLARED FOR THE YEAR. IN SPITE OF HAVING BOTH THE PROFITS AND THE CASH TO PAY DIVIDENDS, THIS DECISION WAS MADE AS THERE ARE PENDING INVESTMENT OPPORTUNITIES AVAILABLE TO CULLINAN WHICH WILL REQUIRE THE CASH. YEAR 2000 COMPLIANCE
THE GROUP HAS ESTABLISHED A YEAR 2000 PROJECT TEAM UNDER SENIOR MANAGEMENT REPORTING TO THE BOARD OF DIRECTORS. THE GROUP'S TARGET TO ACHIEVE COMPLIANCE IS 30 JUNE 1999. ON BEHALF OF THE BOARD SJNASH (EXECUTIVE CHAIRMAN) QASOUTHEY (FINANCIAL DIRECTOR) 2 DECEMBER 1998 DIRECTORS
SJ NASH (EXECUTIVE CHAIRMAN), QASOUTHEY (FINANCIAL DIRECTOR), DNCARSTENS, NODAVIES, PRAFERGUSON, AA THOMPSON REGISTERED OFFICE AND REGISTRATION NUMBER HONDA BUILDING, 104 NORTH REEF ROAD SUNNYROCK EXTENSION 4, GERMISTON 1401 (REGISTRATION NUMBER 01/01808/06) TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED, POBOX 1053, JOHANNESBURG 2000
FOR FURTHER INFORMATION ON GROUP ACTIVITIES, PLEASE WRITE TO: THE GROUP SECRETARY, CULLINAN HOLDINGS LIMITED PO BOX 1928, BEDFORDVIEW 2008
