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INTERIM REPORT FOR THE SIX MONTHS ENDED 31 MARCH 1999
GROUP INCOME STATEMENT
UNAUDITED SIX MONTHS ENDED AUDITED
12 MONTHS TO
31 MARCH 31 MARCH 30 SEPTEMBER
1999 CHANGE 1998 1998
R'000 % R'000 R'000
TURNOVER 198 418 27 156 008 334 667
OPERATING INCOME CONTINUING
OPERATIONS 12 550 52 8 230 17 651
- DISCONTINUED OPERATIONS - - 2
EXCEPTIONAL ITEMS 5 663 1 417 1 651
NET OPERATING INCOME 18 213 9 647 19 304
INTEREST (PAID)/RECEIVED (377) 411 2 949
INCOME BEFORE TAXATION 17 836 10 058 22 253
TAXATION - STC (203) - (62)
NET INCOME AFTER TAXATION 17 633 10 058 22 191
PREFERENCE DIVIDENDS (1 626) (55) (493)
16 007 10 003 21 698
OUTSIDE SHAREHOLDERS' INTEREST (178) - -
NET ATTRIBUTABLE INCOME 15 829 58 10 003 21 698
ORDINARY SHARES (000'S)
- IN ISSUE 729 781 620 526 729 781
- USED TO CALCULATE INCOME AND
HEADLINE INCOME PER ORDINARY SHARE
(WEIGHTED AVERAGE) 729 781 620 526 658 042
INCOME PER ORDINARY SHARE
CENTS) 2,2 38 1,6 3,3
HEADLINE INCOME PER ORDINARY
SHARE (CENTS) 1,4 1,4 3,1
DETERMINATION OF HEADLINE EARNINGS
HEADLINE INCOME 10 166 8 586 20 047
EXCEPTIONAL ITEMS 5 663 1 417 1 651
NET ATTRIBUTABLE INCOME 15 829 10 003 21 698
GROUP BALANCE SHEET
UNAUDITED AUDITED
31 MARCH 31 MARCH 30 SEPTEMBER
1999 1998 1998
R'000 R'000 R'000
FIXED ASSETS - TANGIBLE 48 235 20 944 29 730
- INTANGIBLE 56 593 - 13 146
CURRENT ASSETS 245 695 132 677 171 896
INVENTORIES 119 010 67 646 84 012
ACCOUNTS RECEIVABLE 126 685 65 031 87 884
TOTAL ASSETS 350 523 153 621 214 772
CURRENT LIABILITIES (141 546) (76 273) (133 281)
NET TRADING ASSETS 208 977 77 348 81 491
(BANK OVERDRAFT)/CASH RESOURCES (46 855) 16 497 51 445
LONG-TERM LIABILITIES (15 269) (176) (3 475)
NET ASSETS 146 853 93 669 129 461
FINANCED BY:
ORDINARY SHAREHOLDERS' FUNDS 124 241 92 619 108 415
PREFERENCE SHAREHOLDERS' FUNDS 21 046 1 050 21 046
OUTSIDE SHAREHOLDERS' INTEREST 1 566 - -
146 853 93 669 129 461
FINANCIAL STATISTICS
GEARING (%) 66,1 - -
CURRENT RATIO 1,7 2,0 1,7
NET ASSET VALUE PER SHARE (CENTS) 17,0 15,1 14,9
SUMMARISED GROUP CASH FLOW STATEMENT
UNAUDITED SIX AUDITED
MONTHS ENDED 12 MONTHS TO
31 MARCH 31 MARCH 30 SEPTEMBER
1999 1998 1998
CASH FLOWS FROM OPERATING ACTIVITIES
OPERATING INCOME 18 213 9 647 19 304
DEPRECIATION 4 647 3 888 6 167
RESTRUCTURING PROVISIONS AND
EXCEPTIONAL ITEMS (6 912) (1 413) 15 603
OTHER NON-CASH ITEMS (50) (40) (23 117)
(INCREASE)/DECREASE IN WORKING
CAPITAL (35 778) 1 093 8 944
CASH (UTILISED BY)/GENERATED FROM
OPERATING ACTIVITIES (19 880) 13 175 26 901
INTEREST RECEIVED - 411 2 949
INTEREST PAID (377) - -
TAXATION PAID (223) - (11)
PREFERENCE DIVIDENDS PAID (1 261) - -
NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES (21 741) 13 586 29 839
CASH FLOWS FROM INVESTING ACTIVITIES
INVESTMENT TO MAINTAIN OPERATIONS
REPLACEMENT OF FIXED ASSETS (3 339) (1 493) (2 353)
NET PROCEEDS FROM DISPOSALS
OF FIXED ASSETS 1 188 1 455 2 330
PROCEEDS FROM DISPOSAL OF
SUBSIDIARIES AND INVESTMENTS 2 000 19 270 18 927
INVESTMENT TO EXPAND OPERATIONS
ADDITIONS TO FIXED ASSETS (10 917) - (5 612)
NET (OUTFLOW)/PROCEEDS FROM
DISPOSALS AND ACQUISITIONS (74 227) - 1 340
NET CASH (OUTFLOW)/INFLOW FROM
INVESTING ACTIVITIES (85 295) 19 232 14 632
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM ISSUE OF SHARES - - 20 000
LONG-TERM LIABILITIES RAISED 8 736 - 2 923
PREFERENCE SHARES REDEEMED - - (4)
NET CASH INFLOW FROM FINANCING
ACTIVITIES 8 736 - 22 919
(DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (98 300) 32 818 67 390
COMMENTS
IN THE PAST SIX MONTHS CULLINAN HOLDINGS HAS PROGRESSED FURTHER IN ITS
OBJECTIVE OF BUILDING TWO DIVISIONS VIZ TOURISM & LEISURE AND OUTDOOR
LIFESTYLE. IN ADDITION, WE HAVE BECOME LESS DEPENDENT ON THE SOUTH AFRICAN
ECONOMY BY MAKING AN INTERNATIONAL INVESTMENT THROUGH THE ACQUISITION OF 83% OF
KARRIMOR INTERNATIONAL LIMITED IN THE UK.
IN SUMMARY THE ACHIEVEMENTS DURING THE SIX MONTHS HAVE BEEN:
- THE ACQUISITION OF MANEX MARINE.
- THE ACQUISITION OF KARRIMOR INTERNATIONAL.
- THE SALE OF CULLINAN INDUSTRIAL PORCELAIN.
- THE ISSUE OF R25 MILLION CULLINAN HOLDINGS PREFERENCE SHARES IN APRIL 1999.
- THE ACQUISITION BY THOMPSONS OF TSUNAMI TRAVEL FROM STAR SCHOOLS.
- THE ACQUISITION OF INDABA SAFARI TOURS, A 4X4 OPEN VEHICLE TOUR OPERATOR INTO
THE KRUGER NATIONAL PARK.
- AS AT THE DATE OF WRITING, THE SIGNATURE OF A HEADS OF AGREEMENT TO ACQUIRE
100% OF PENTRAVEL, THE LARGEST INDEPENDENT GROUP OF TRAVEL AGENTS IN SOUTH
AFRICA.
SUMMARY OF RESULTS
ALTHOUGH THE EARNINGS PER SHARE HAVE GROWN FROM 1,6 CENTS PER SHARE LAST HALF
YEAR TO 2,2 CENTS THIS HALF YEAR, THIS WAS HELPED BY THE EXCEPTIONAL PROFIT ON
THE SALE OF CULLINAN INDUSTRIAL PORCELAIN.
THE HEADLINE EARNINGS REMAINED AT 1,4 CENTS PER SHARE AND THIS WAS DUE TO:
- A TIGHT CONSUMER MARKET BECAUSE OF HIGH INTEREST RATES;
- A CALCULATED DECISION TO ACQUIRE KARRIMOR IN AN ENVIRONMENT OF HIGH INTEREST
RATES. THIS POSITION WILL CORRECT ITSELF AS SOUTH AFRICAN INTEREST RATES
DECLINE, AND THE BALANCE SHEET STRENGTHENS; AND
- DISAPPOINTING OPERATING RESULTS FROM SOME OF THE OUTDOOR LIFESTYLE DIVISIONS.
DIVISIONAL COMMENTARY
TOURISM & TRAVEL
THOMPSONS SOUTH AFRICA (INBOUND TOURISM)
AN EXCELLENT SIX MONTHS WAS ACHIEVED WITH GROWTH IN REVENUE AND PROFIT. WE HAVE
RECENTLY ACQUIRED INDABA SAFARI TOURS WHICH IS A 4X4 OPEN VEHICLE TOUR OPERATOR
BASED OUTSIDE THE KRUGER NATIONAL PARK, AND THIS WILL HELP PRODUCE A GUARANTEED
QUALITY OF SERVICE TO TOURISTS.
THOMPSONS TOURS (OUTBOUND AND REGIONAL TOURS)
RESULTS WERE AS EXPECTED IN SPITE OF A FALLING RAND VALUE CAUSING SOUTH
AFRICANS TO TRAVEL MORE REGIONALLY THAN INTERNATIONALLY.
THOMPSONS TRAVEL & LEISURE
THE RETAIL AND CORPORATE DIVISIONS PRODUCED GOOD RESULTS.
CULLINAN BUSINESS SYSTEMS
THE TRAVEL INDUSTRY IS MOVING TOWARDS DIRECT CONSUMER PURCHASES OF THE TOTAL
TRAVEL PRODUCT VIA E-COMMERCE. A NEW IT DIVISION HAS BEEN FORMED WITH
MANAGEMENT RECRUITED FROM AN INTERNET SERVICE PROVIDER. THIS DIVISION WILL SELL
ITS SERVICES TO THE THOMPSONS WHOLESALE AND RETAIL TRAVEL DIVISIONS, AND TO THE
REST OF THE CULLINAN GROUP. SUBSTANTIAL INVESTMENTS ARE BEING MADE IN THIS
DIVISION TO ENSURE THAT CULLINAN IS AT THE FOREFRONT OF ALL ELECTRONICALLY
BOOKED TRAVEL REQUIREMENTS.
OUTDOOR LIFESTYLE
KARRIMOR INTERNATIONAL
THE TRANSACTION TO ACQUIRE 83% OF KARRIMOR WAS COMPLETED IN JANUARY. AS
ANTICIPATED WE HAVE RESTRUCTURED THE BUSINESS AND CUT OVER #1 MILLION PER ANNUM
FROM THE OVERHEAD COSTS WHICH WERE EXCESSIVE. THE RESULTS FOR THE PERIOD WERE
IN LINE WITH EXPECTATIONS, AND THE COMPANY WILL BE CONSOLIDATED OVER THE NEXT
YEAR BEFORE LOOKING TO EXPAND INTERNATIONALLY.
MIDMACOR HONDA/MANEX MARINE
HIGH INTEREST RATES AFFECTED SALES OF MOTORCYCLES WITH THE RESULT THAT
OPERATING PROFITS WERE BELOW THOSE ACHIEVED LAST YEAR. MANEX MARINE PRODUCED
RESULTS ABOVE EXPECTATIONS.
CADAC GROUP
OPERATIONAL PERFORMANCE WAS POOR AND THERE WERE FLAT LOCAL SALES. THE FACTORY
UPGRADE AND REORGANISATION HAS NOW BEEN EFFECTIVELY COMPLETED. IN ADDITION THE
COMPANY HAS RECEIVED SUBSTANTIAL EXPORT ORDERS FOR CADAC BARBECUES TO BE SOLD
IN THE USA. ALTHOUGH BUILDING EXPORT MARKETS HAS BEEN COSTLY IN THE SHORT TERM,
THE EFFORTS SPENT OVER THE PAST TWO YEARS COULD NOW RESULT IN CADAC BECOMING AN
INTERNATIONAL BRAND.
AFMIT TOOLS
THE MERGER OF A-FILE AND MITCO HAS SAVED OVERHEAD COSTS AS WAS EXPECTED, BUT
GROWTH IN THIS RELATIVELY SMALL PART OF CULLINAN IS NOT ANTICIPATED.
INDUSTRIAL CULLINAN
CULLINAN PRECISION ENGINEERING (CPE)
CPE HAD A MODERATE SIX MONTHS AND WILL GENERATE A BETTER SECOND HALF.
BALANCE SHEET
THERE HAS BEEN A SUBSTANTIAL CHANGE TO THE CULLINAN BALANCE SHEET OVER THE SIX
MONTH PERIOD AND THE GROUP SUFFERED A NEGATIVE CASH FLOW. THIS HAS BEEN CAUSED
BY:
- THE ACQUISITION REFERRED TO ABOVE (SPECIFICALLY KARRIMOR INTERNATIONAL); AND
- INCREASES IN WORKING CAPITAL REQUIREMENTS MAINLY AS A RESULT OF LOWER
CREDITORS.
FUTURE PROSPECTS
BETTER RESULTS ARE EXPECTED IN THE SECOND HALF OF THE YEAR DUE TO FALLING SA
INTEREST RATES, AND A STRONGER BALANCE SHEET AFTER THE ISSUE OF PREFERENCE
SHARES. THE OPPORTUNITY REMAINS WITHIN THE CULLINAN BUSINESS UNITS TO IMPROVE
OPERATING EFFICIENCIES SUBSTANTIALLY AND THESE CAN BE ACHIEVED IN SPITE OF A
SLUGGISH SOUTH AFRICAN ECONOMY.
YEAR 2000
THE GROUP IS ON TARGET TO ACHIEVE YEAR 2000 COMPLIANCE BY THE END OF JUNE 1999.
DIVIDENDS
NO INTERIM DIVIDEND HAS BEEN DECLARED AS ANTICIPATED GROWTH AND ACQUISITIONS
WILL ABSORB ANY FREE CASH AVAILABLE.
ON BEHALF OF THE BOARD
SJ NASH QA SOUTHEY
EXECUTIVE CHAIRMAN FINANCIAL DIRECTOR
14 MAY 1999
DIRECTORS: SJ NASH (EXECUTIVE CHAIRMAN), QA SOUTHEY (FINANCIAL DIRECTOR), AA
THOMPSON, DN CARSTENS, NO DAVIES, PRA FERGUSON
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, PO BOX 1053, JOHANNESBURG
2000
FOR FURTHER INFORMATION ON GROUP ACTIVITIES, PLEASE WRITE TO: THE GROUP
SECRETARY, CULLINAN HOLDINGS LIMITED, PO BOX 1928, BEDFORDVIEW 2008
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