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CULLINAN HOLDINGS LIMITED
RESULTS FOR THE YEAR ENDED 3O SEPTEMBER 1999
- SHAREHOLDERS' FUNDS INCREASED BY 16,7%
- GEARING IMPROVED SINCE THE HALF YEAR RESULTS
- CONTINUING CONSOLIDATION OF THE GROUP INTO TOURISM & TRAVEL AND OUTDOOR
LIFESTYLE
GROUP INCOME STATEMENT
AUDITED AUDITED
YEAR ENDED YEAR ENDED
30 SEPT 30 SEPT
1999 1998
R'000 R'000
TURNOVER 600 348 334 667
OPERATING INCOME/(LOSS)
- CONTINUING OPERATIONS 10 034 17 651
- DISCONTINUED OPERATIONS (1 375) 2
EXCEPTIONAL ITEMS 16 965 1 651
NET OPERATING INCOME 25 624 19 304
INTEREST (PAID)/RECEIVED (3 491) 2 949
INCOME BEFORE TAXATION 22 133 22 253
TAXATION 537 62
NET INCOME AFTER TAXATION 21 596 22 191
OUTSIDE SHAREHOLDERS' INTEREST 834 -
PREFERENCE DIVIDENDS (4 302) (493)
NET ATTRIBUTABLE INCOME 18 128 21 698
ORDINARY SHARES (000'S)
- IN ISSUE 734 638 729 781
- USED TO CALCULATE PROFIT AND HEADLINE PROFIT
PER ORDINARY SHARE (WEIGHTED AVERAGE) 732 629 658 042
INCOME PER ORDINARY SHARE (CENTS) 2,5 3,3
HEADLINE INCOME PER ORDINARY SHARE (CENTS) 0,2 3,1
DETERMINATION OF HEADLINE EARNINGS
NET ATTRIBUTABLE INCOME 18 128 21 698
PROFIT ON SALE OF SUBSIDIARIES, PLANT
AND EQUIPMENT (31 137) (22 610)
RECONSTRUCTION, REORGANISATION AND
OTHER EXPENSES 14 172 20 959
HEADLINE INCOME 1 163 20 047
GROUP BALANCE SHEET
AUDITED AUDITED
30 SEPT 30 SEPT
1999 1999
AFTER BEFORE AUDITED
INTANGIBLES INTANGIBLES 30 SEPT
WRITTEN OFF WRITTEN OFF 1998
R'000 R'000 R'000
PROPERTY, PLANT AND EQUIPMENT 58 789 58 789 29 730
INTANGIBLES
- GOODWILL - 78 293 -
- TRADEMARKS - 13 146 13 146
CURRENT ASSETS 259 073 259 073 223 341
INVENTORIES 104 379 104 379 84 012
ACCOUNTS RECEIVABLE 154 694 154 694 87 884
CASH RESOURCES - - 51 445
TOTAL ASSETS 317 862 409 301 266 217
CURRENT LIABILITIES (211 358) (211 358) (133 281)
ACCOUNTS PAYABLE (199 072) (199 072) (133 281)
BANK OVERDRAFTS (12 286) (12 286) -
106 504 197 943 132 936
INTEREST-BEARING TERM LOANS (15 237) (15 237) (3 475)
NET ASSETS 91 267 182 706 129 461
FINANCED BY:
ORDINARY SHAREHOLDERS' FUNDS 43 682 126 472 108 415
PREFERENCE SHAREHOLDERS' FUNDS 46 046 46 046 21 046
OUTSIDE SHAREHOLDERS' INTEREST 1 539 10 188 -
SHAREHOLDERS' FUNDS 91 267 182 706 129 461
FINANCIAL STATISTICS
GEARING (%) 162,7 53,8 -
CURRENT RATIO 1,2 1,2 1,7
NET ASSET VALUE PER
SHARE (CENTS) 5,9 17,2 14,9
SUMMARISED GROUP CASH FLOW STATEMENT
AUDITED AUDITED
YEAR ENDED YEAR ENDED
30 SEPT 30 SEPT
1999 1998
R'000 R'000
CASH FLOWS FROM OPERATING ACTIVITIES
OPERATING INCOME 25 624 19 304
DEPRECIATION 11 695 6 167
RESTRUCTURING PROVISIONS AND
EXCEPTIONAL ITEMS 14 172 14 421
PROFIT ON SALE OF SUBSIDIARIES, PLANT
AND EQUIPMENT AND OTHER NON-CASH ITEMS (43 497) (21 935)
(INCREASE)/DECREASE IN WORKING CAPITAL (49 159) 8 944
CASH (UTILISED BY)/GENERATED FROM
OPERATING ACTIVITIES (41 165) 26 901
INTEREST (PAID)/RECEIVED (3 491) 2 949
TAXATION PAID (792) (11)
DIVIDENDS PAID (4 772) -
NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES (50 220) 29 839
CASH FLOWS FROM INVESTING ACTIVITIES
INVESTMENT TO MAINTAIN OPERATIONS
REPLACEMENT OF PLANT AND EQUIPMENT (31 244) (2 353)
PROCEEDS FROM DISPOSAL OF
PLANT AND EQUIPMENT 4 735 2 330
PROCEEDS FROM DISPOSAL OF SUBSIDIARIES 39 578 18 927
INVESTMENT TO EXPAND OPERATIONS
ADDITIONS TO PLANT AND EQUIPMENT - (5 612)
ACQUISITION OF SUBSIDIARIES (70 677) 1 340
NET CASH (OUTFLOW)/INFLOW FROM
INVESTING ACTIVITIES (57 608) 14 632
CASH FLOWS FROM FINANCING ACTIVITIES
PREFERENCE SHAREHOLDERS' FUNDING 25 000 20 000
INTEREST-BEARING LOANS RAISED 13 048 2 923
OUTSIDE SHAREHOLDERS' FUNDING 6 049 -
PREFERENCE SHARES REDEEMED - (4)
NET CASH INFLOW FROM FINANCING ACTIVITIES 44 097 22 919
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (63 731) 67 390
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 51 445 (15 945)
CASH AND CASH EQUIVALENTS AT END OF YEAR (12 286) 51 445
COMMENTS
THE SECOND HALF OF THE YEAR HAS BEEN A MIXED BAG FOR CULLINAN HOLDINGS. THE
GROUP DID NOT PRODUCE THE TRADING PROFITABILITY EXPECTED, BUT THERE WAS A
SUBSTANTIAL CASH INJECTION AND PROFIT FROM THE SALE OF SUBSIDIARIES. THE NET
RESULT WAS A PROFIT OF R18,1 MILLION, MADE UP OF R1,1 MILLION TRADING PROFITS
AND R17,0 MILLION EXCEPTIONAL INCOME, AND THEREFORE AN INCREASE IN
SHAREHOLDERS' FUNDS FROM R108,4 MILLION TO R126,5 MILLION BEFORE ANY WRITE-OFF
OF GOODWILL AND TRADEMARKS.
SUMMARY OF RESULTS
THE POOR RESULTS FROM TRADING WERE DUE TO:
- SECOND HALF YEAR SEASONAL FACTORS AFFECTED BOTH TOURISM AND OUTDOOR LIFESTYLE
- HIGH INTEREST RATES AT A TIME OF HIGH GROUP BORROWINGS; AND
- POOR OPERATIONAL PERFORMANCES FROM SOME BUSINESSES.
DIVISIONAL COMMENTARY
TOURISM & TRAVEL
THE THOMPSONS TOURISM DIVISION CONTINUED TO PERFORM WELL AND THE NEW
ACQUISITIONS OF PENTRAVEL AND THOMPSONS INDABA SAFARIS ARE NOW BEING
SATISFACTORILY ABSORBED INTO THE GROUP.
CULLINAN BUSINESS SYSTEMS IS NOW AN OPERATIONALLY SUCCESSFUL DIVISION OF THE
CULLINAN GROUP WITH A SPECIFIC FOCUS ON TOURISM AND E-TRAVEL.
OUTDOOR LIFESTYLE
CADAC GROUP
CADAC AGAIN PRODUCED UNACCEPTABLE RESULTS DUE TO POOR MANAGEMENT PERFORMANCE,
THE COSTS ASSOCIATED WITH FACTORY RESTRUCTURING AND IN BUILDING EXPORT MARKETS.
THE MANAGEMENT ISSUE IS BEING ADDRESSED, THE FACTORY RESTRUCTURING IS NOW
COMPLETE, AND EXPORT MARKETS ARE NOW PROFITABLE.
MIDMACOR GROUP
MIDMACOR HAD AN ACCEPTABLE PERFORMANCE IN A YEAR WHICH, AS A RESULT OF THE HIGH
INTEREST RATES, WAS FLAT FOR THE INDUSTRY AS A WHOLE. MANEX MARINE HAD AN
EXCELLENT YEAR, AND V-LINES HAS NOW BEEN ABSORBED AS A DIVISION INTO MIDMACOR.
KARRIMOR GROUP
KARRIMOR MADE A SMALL LOSS IN A TIGHT UK ECONOMY. IT HAS NOW RESTRUCTURED OUT
OF ITS MANUFACTURING BASE IN THE UK AND ALL PRODUCTS ARE OUTSOURCED TO LOW COST
SUPPLIERS INTERNATIONALLY. IT HAS FURTHERMORE SUCCEEDED IN LAUNCHING SUCCESSFUL
NEW RANGES OF RUCKSACKS, FOOTWEAR AND CLOTHING.
DISCONTINUED OPERATIONS
AS AFMIT TOOLS AND CULLINAN PRECISION ENGINEERING DO NOT FORM PART OF OUR
LONG-TERM PLANS, THEY WILL BE SOLD, GIVEN THE RIGHT OPPORTUNITY. CULLINAN
INDUSTRIAL PORCELAIN WAS SOLD IN THE FIRST HALF OF THE YEAR. CULLINAN WILL
EFFECTIVELY CONSIST ONLY OF THE TOURISM &TRAVEL AND OUTDOOR LIFESTYLE DIVISIONS
EXCEPTIONAL ITEMS
THIS IS MADE UP AS FOLLOWS:
R'000
- PROFIT ON SALE OF SUBSIDIARIES,
PLANT AND EQUIPMENT 31 137
- RECONSTRUCTION, REORGANISATION AND OTHER EXPENSES
- COST RELATING TO THE ACQUISITION
OF SUBSIDIARIES (3 973)
- REORGANISATION COSTS OF CADAC FACTORY (4 217)
- YEAR 2000 (2 006)
- RETRENCHMENT AND OTHER REORGANISATION COSTS (3 976) (14 172)
16 965
BALANCE SHEET
IN THE PERIOD SINCE THE INTERIM RESULTS WERE PUBLISHED, THE BALANCE SHEET HAS
BEEN STRENGTHENED BY THE SALE OF SUBSIDIARIES. AS A RESULT OF THIS, AND THE
ISSUE OF PREFERENCE SHARES, THE GROUP NET BANK OVERDRAFT HAS DECLINED FROM
R46,8 MILLION IN MARCH 1999 TO R12,3 MILLION AT YEAR-END. THE ONGOING SALE OF
DISCONTINUED OPERATIONS WILL CONTINUE TO STRENGTHEN THE BALANCE SHEET.
FUTURE PROSPECTS
THE COMPANY IS CONCENTRATING ON THE OPERATIONAL PERFORMANCE IN ALL DIVISIONS SO
THAT THE TRADING RESULTS ARE TRANSFORMED TO ACCEPTABLE LEVELS. AFTER AN
EMBARRASSINGLY POOR PROJECTION AT OUR HALF YEAR, IT IS ANTICIPATED THAT THE
RESULTS WILL IMPROVE IN THE COMING YEAR.
WRITE OFF OF GOODWILL AND TRADEMARKS
ALTHOUGH THE COMPANY OWNS VALUABLE TRADEMARKS ON A WORLDWIDE BASIS VIZ:
CADAC
KARRIMOR
THOMPSONS
PENTRAVEL
AND HAS PAID SUBSTANTIAL GOODWILL TO ACQUIRE THOMPSONS AND KARRIMOR, IT HAS
BEEN DECIDED TO WRITE OFF ALL GOODWILL AND TRADEMARKS IN THE BALANCE SHEET. THE
EFFECT OF THIS IS SHOWN IN THE ACCOMPANYING BALANCE SHEETS.
THOMPSONS VENDOR'S PUT OPTION
THE VENDORS OF THE THOMPSONS GROUP HAVE A PUT OPTION IN RESPECT OF 50 MILLION
OF THE CULLINAN SHARES ISSUED TO THEM IN TERMS OF THE ACQUISITION AGREEMENT.
THE PUT OPTION CAN BE EXERCISED IN QUARTERLY TRANCHES FROM 1 APRIL 2000. THE
EXERCISE OF THE PUT OPTION REQUIRES CULLINAN TO PROCURE THE SALE OF THE PUT
SHARES AT A PRICE OF NOT LESS THAN 50 CENTS PER SHARE.
IT IS THE INTENTION OF THE COMPANY TO BUY BACK THESE SHARES AND THE DIFFERENCE
BETWEEN THE MARKET PRICE AND 50 CENTS PER SHARE (TO THE EXTENT OF R20 MILLION)
HAS BEEN PROVIDED FOR IN FULL.
YEAR 2000 COMPLIANCE
THE PROGRAMME FOR YEAR 2000 COMPLIANCE HAS BEEN COMPLETED AND NO SIGNIFICANT
PROBLEMS IN THIS AREA ARE ANTICIPATED. THE PROGRAMME INCLUDED A COMPREHENSIVE
INTERNAL REVIEW, DETAILED TESTING AND SUPPLIER CERTIFICATION.
DIVIDENDS
NO ORDINARY DIVIDENDS HAVE BEEN DECLARED.
DIVIDENDS ON THE FOLLOWING PREFERENCE SHARES HAVE BEEN FULLY PROVIDED AND PAID
IF DUE:
- 5,5% CUMULATIVE PREFERENCE SHARES.
- VARIABLE RATE CUMULATIVE REDEEMABLE PREFERENCE SHARES.
- VARIABLE RATE CUMULATIVE REDEEMABLE CONVERTIBLE PREFERENCE SHARES.
ON BEHALF OF THE BOARD
SJ NASH QA SOUTHEY
EXECUTIVE CHAIRMAN FINANCIAL DIRECTOR
21 DECEMBER 1999
DIRECTORS: SJ NASH (EXECUTIVE CHAIRMAN), QA SOUTHEY (FINANCIAL DIRECTOR), AA
THOMPSON
REGISTERED OFFICE AND
REGISTRATION NUMBER TRANSFER SECRETARIES
1ST FLOOR, SABLE PLACE MERCANTILE REGISTRARS LIMITED
52 GROVENOR ROAD 8TH FLOOR, 11 DIAGONAL STREET
BRYANSTON, SANDTON, 2196 JOHANNESBURG, 2001
(REGISTRATION NUMBER 01/01808/06) 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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