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SEKUNJALO INVESTMENTS LIMITED - SEKUNJALO UNAUDITED INTERIM RESULTS FOR THE

Release Date: 17/05/2004 10:00
Code(s): SKJ
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SEKUNJALO INVESTMENTS LIMITED - SEKUNJALO UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 29 FEBRUARY 2004 SEKUNJALO INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) Registration number 1996/006093/06 Share Code: SKJ ISIN: ZAE000017893 ("Sekunjalo") SEKUNJALO UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 29 FEBRUARY 2004 FINANCIAL HIGHLIGHTS * GROUP HEADLINE EARNINGS R1,785m * GROUP TURNOVER R129.5m * EARNINGS PER SHARE 6.30 cents * HEADLINE EPS 1.50 cents GROUP BALANCE SHEET Unaudited Unaudited Audited 6 months to 6 months to to
29 February 28 February 31 August 2004 2003 2003 R"000 R"000 R"000 ASSETS Non-current assets 119 625 121 297 125 247 Property, plant and equipment 56 418 66 916 63 768 Goodwill and intangible assets 12 291 15 895 12 523 Pharmeceutical dossiers 28 050 29 750 28 900 Biological assets 5 370 - 6 370 Investments (including associate companies) 13 109 6 250 6 986 Loans receivable 4 386 2 486 6 700 Current assets 137 770 159 505 142 298 Inventories 57 333 47 508 31 859 Trade and other receivables 60 221 59 084 74 739 Bank and cash on hand 20 216 52 913 35 700 TOTAL ASSETS 257 395 280 802 267 545 EQUITY AND LIABILITIES Capital and reserves Issued capital 214 212 127 837 135 812 Non-distributable reserves 39 39 39 Accumulated loss (103 719) (120 071) (111 218) 110 533 7 805 24 633 Non-current liabilities Interest-bearing borrowings 71 310 109 157 139 454 Non-interest-bearing borrowings 465 1 842 914 Deferred taxation 2 231 (12 041) 2 248 Minority shareholders" interest (1 555) 52 540 2 151 Current liabilities 74 412 121 499 98 145 Trade and other payables 51 242 76 424 68 905 Bank overdraft 21 711 41 140 26 308 Receiver of revenue 1 459 3 935 2 932 TOTAL EQUITY AND LIABILITIES 257 395 280 802 267 545 ABRIDGED CASH FLOW STATEMENT FOR THE PERIOD ENDED 29 FEBRUARY 2004 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 29 February 28 February 31 August
2004 2003 2003 R"000 R"000 R"000 Cash flows from operating activities (23 879) (17 913) 5 069 Cash utilised by investing activities 757 (14 552) (7 256) Cash flows from financing activities 12 235 28 409 (4 250) Net decrease in cash and cash equivalents (10 887) (4 056) (6 437) Cash and cash equivalents at beginning of period 9 392 15 829 15 829 Cash and cash equivalents at end of period (1 495) 11 773 9 392 GROUP INCOME STATEMENT Unaudited Unaudited Audited
6 months to 6 months to to 29 February 28 February 31 August 2004 2003 2003 R"000 R"000 R"000
REVENUE 129 514 176 801 356 664 Operating income 9 217 12 754 38 009 Finance cost (4 149) (9 258) (24 956) Profit before tax 5 068 3 496 13 053 Taxation (215) (1 362) (10 521) Income after tax 4 853 2 134 2 532 Income from associates - - 80 Income 4 853 2 134 2 612 Minority shareholders" interest 2 646 (798) 9 671 Net Income for the period 7 499 1 336 12 283 Headline earnings Attributable Income 7 499 1 336 12 283 Amortisation of goodwill 95 98 190 Amortisation of dossiers 276 165 330 Amortisation and impairment of patents and trademarks 139 205 685 Profit on disposal of property, plant and equipment - - (155) Loss on sale of division - - 2 396 Loss on sale of property, plant and equipment - - 242 Software development costs written-off 76 - 74 Unrealised profit on loan acquired (6 299) - - Headline earnings 1 785 1 804 16 045 - - -
Number of shares in issue 234 143 393 8 688 848 88 688 848 Headline earnings per share (cents) 1.50 2.03 18.09 Earnings per share (cents) 6.30 1.51 13.85 Diluted earnings per share (cents) 6.24 1.47 13.57 NOTE: 1. The calculation of earnings per share is based on a profit of R7 499 000 (2003: R1 336 000) and a weighted number of 119 058 478 (2003: 88 688 848) ordinary shares in issue throughout the year. 2. The calculation of headline earnings per share is based on a headline profit of R1 785 000 (2003: R1 804 000) and a weighted number of 119 058 478 (2003: 88 688 848) ordinary shares in issue throughout the year. 3. The calculation of diluted earnings per share is based on a profit of R7 499 000 (2003: R1 336 000) and a diluted number of 120 141 081 (2003: 90 527 760) ordinary shares in issue, assuming all the share options in existence at balance sheet date were issued. GROUP STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 29 FEBRUARY 2004 Non- distri- Accu- Share Share butable mulated capital premium reserves CRRF loss Total
R"000 R"000 R"000 R"000 R"000 R"000 Balance at 31 August 2002 1 554 126 283 39 - (106 176) 21 700 Fundamental error - - - - (523) (523) Transfer to capital redemption reserve fund (CRRF) - - - 16 802 (16 802) - Premium on redemption of preference shares - - - (8 827) - (8 827) Net profit from ordinary activities - - - - 12 283 12 283 Balance at 31 August 2003 1 554 126 283 39 7 975 (111 218) 24 633 Increase in share premium - 78 399 - - - 78 399 Issue of shares 2 - - - - 2 Net profit from ordinary activities - - - - 7 499 7 499 Balance at 28 February 2004 1 556 204 682 39 7 975 (103 719) 110 533 OVERVIEW The interim results have been prepared on the historical cost basis in accordance with South African Statements of Generally Accepted Accounting Practice. Accounting policies which have been applied are consistent in all material respects with those applied in the previous year. COMMENTARY Sekunjalo Investments Ltd has produced satisfactory interim results for the period ended 29 February 2004. The results have been achieved despite the significant strengthening of the rand, which has influenced the revenue and margins of the group"s three major businesses in the fishing, healthcare and IT sectors. As in the past, the interim results of Sekunjalo are impacted upon by the seasonal fluctuation in the fishing and health care industries. The group expects to deliver a much stronger performance in the second half of the financial year. Significantly, the group has strengthened its balance sheet by retiring debt of R80 million resulting in reduced finance costs by 50%, thereby positioning itself for strong growth in the year ahead. The earnings of the group increased to R7.499 million from R1.336 million for the comparable period in 2003. Similarly earnings per share increased substantially from 1.51 cents to 6.30 cents per share. Headline earnings have decreased marginally from R1.804 million to R1.785 million. The decrease in headline earnings is mainly attributed to the strengthening of the rand by approximately 40% in the last financial year. Review of investments Premier Fishing SA (Pty) Ltd Premier Fishing, one of South Africa"s major exporters of lobster, squid and hake has seen a substantial decline in revenue and margins owing to the strengthening of the rand. An alternative strategy of joint ventures in African countries has helped set off rand strength. The company"s growth in the cold storage and organic fertiliser businesses continues to add value and profits to the group"s bottom line. Branded products of Pecks, Redro, Seagro and South Atlantic Lobster continue to enjoy a pre-eminent position in the market place. As part of Premier Fishing"s strategy to support external quota holders and its commitment to gender empowerment, it has appointed a black female executive to head the transformation portfolio of the company. Sekunjalo Health Care Sekunjalo Health Care, which now consists of independent, autonomous business units Rapimed, Sekpharma, New Promex Corporation and Health System Technologies, continues to compete in an environment of regulatory uncertainty and industry turmoil. Sekunjalo Health Care is currently reviewing a number of potential investments which could add value to its underlying subsidiaries. Sekpharma (Pty) Ltd Sekpharma continues to market branded generic products such as Betnovate, Dermovate, asthma medication such as Becotide, Becloforte and Volmax, as well as anti-microbial such as Fortum. The company has entered into a number of joint ventures with multinationals and is seeking to add to its product portfolio through acquisitions in the next 18 to 24 months. Sekpharma is concerned about the impact of the regulatory uncertainty on its underlying core business and as such the company is working closely in private partnerships and is engaging government to achieve a satisfactory outcome. Rapimed Rapimed"s consistent focus on the public sector has been rewarded with a two- year contract to supply Rapid Urine Diagnostics to the government. It has implemented a strategy to increase its market share in the private sector aimed at increasing the profit margin of the business. An important development is the awarding of ISO 9000 accreditation which will allow Rapimed to market more aggressively into international markets. New Promex Corporation New Promex Corporation (NPC), in line with the group"s previously stated employee ownership and empowerment strategy, sold 50% of the business to management resulting in the formation of NPC. Although NPC continues to be a market leader in branded hypodermic needles and syringes it has struggled to cope with the adverse impact of the strengthening of the Rand. This has resulted in significantly cheaper imports from China and India putting pressure on revenues and margins. Furthermore, the strength of the Rand has made it difficult to compete with exports into the African countries. Health System Technologies (HST) HST is currently successfully completing the provision of hospital information systems to the tertiary hospitals such as Groote Schuur Hospital, Tygerberg and Red Cross Children"s Hospital. The implementation of the system in secondary hospitals has commenced with the Provincial Administration of the Western Cape benefiting substantially from the successful roll-out of the HST system. Prospects Sekunjalo, with a strengthened balance sheet and a transformative empowerment business model, is ready for substantial growth and acquisitions. Its sustainable, broad-based and genuine empowerment approach will ensure that it is well positioned for the long-term allocation of fishing rights as well as public/private partnerships in the health care sector. Sekunjalo continues to seek the recovery of a substantial portion of its LeisureNet investment from Deloitte & Touche, their auditors, at the time of the liquidation. The Sekunjalo empowerment share options have been extended by a further year to 31 May 2005. By order of the Board Dr WA Mgoqi Dr MI Surve Chairman Chief Executive Cape Town 17 May 2004 Directors Dr WA Mgoqi (Chairman), Dr MI Surve* (Chief Executive Officer), MY Kajee*, F Kahn* (Financial Director), AJ Snyders, KC Patel*, Z Kota, D Case, MJ Ramatlhodi *Executive Directors PR Phillips (Company Secretary) Registered Address: Transfer Secretaries: 5th Floor, Protea Place Computershare Limited Protea Road, Claremont 70 Marshall Street Johannesburg, 2001 Sponsors: Nedbank Capital Date: 17/05/2004 10:00:11 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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