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SKJ - Sekunjalo Investments - Unaudited group interim results for the period
ended 28 february 2010 and cautionary announcement
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: SKJ and ISIN: ZAE000017893
("Sekunjalo" or "the Group" or "the Company")
Unaudited Group Interim results for the period ended 28 February 2010 and
Cautionary announcement
ABRIDGED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Revenue 183 533
167 972 405 910
Profit/(loss) from operations 14 185 -27 883
11 827
Investment revenue 7 927
4 411 5 649
(Loss)/income from associate 4 944
-3 365 -5 224
Finance Cost -15 945
-6 636 -18 786
Profit/(loss) before tax 11 111
6 237 -46 244
Tax -1 174
-2 579 -13 928
Profit / (Loss) after tax from 9 937
continuing operations 3 658 -60 172
Profit after tax from -
discontinuing operations - 1 400
Other comprehensive income -
- -
Total comprehensive 9 937
income/(loss) 3 658 -58 772
Attributable To:-
Outside shareholders 28
173 169
Parent 9 909
3 485 -58 941
Total comprehensive income / 9 937
(loss) 3 658 -58 772
Headline earnings 2 689
1 120 7 571
Number of shares in issue 489 339
(`000) 489 339 488 809
Weighted number of shares in 489 339
issue (`000) 489 339 489 073
Diluted number of shares in 489 339
issue (`000) 489 339 489 073
Headline Earnings per share 0.23 0.55 1.55
(cents)
- continuing operations 0.23 0.55 1.26
- discontinuing operations - - 0.29
Earnings / (loss) per share 0.71 2.02 -12.05
(cents)
- continuing operations 0.71 2.02 -12.34
- discontinuing operations - - 0.29
Diluted earnings per share 0.71 0.55 1.32
(cents)
Net Asset Value per share 81.26 93.77 80.57
(cents)
Tangible net asset value per 64.56 66.61 63.63
share (cents)
ABRIDGED GROUP STATEMENT OF FINANCIAL
POSITION
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
ASSETS
Non current assets 587 623
525 314 504 822
Property, Plant and Equipment 195 688
142 425 143 614
Goodwill 94 459
57 642 57 642
Intangibles 45 950
24 176 25 244
Other Investments -
- -
Investments in Joint Ventures -
50 50
Investments in Associates 154 994
155 766 144 776
Biological assets -
- -
Other Financial Assets 63 326
113 264 102 164
Deferred tax 33 206
31 991 31 332
Current assets 263 280
185 183 200 249
Inventory 59 982
29 132 21 634
Biological assets 33 057
37 065 38 320
Other Financial Assets 3 740
11 001 22 066
Tax 993
1 155 451
Trade and other receivables 148 804
74 879 66 723
Bank 16 704
31 951 51 055
Assets of disposal groups -
classified as held for sale - 18 386
TOTAL ASSETS 850 903
710 497 723 457
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 402 977 403 177
402 977
Reserves 121 194 121 194 121 194
Accumulated losses -126 447 -58 513 -129 932
Equity Attributable to Parent 397 724 466 355 394 239
Outside shareholders interest -2 594 -7 478 -1 942
Total Equity 395 130 458 877 392 297
Non current liabilities 152 718 167 493 153 448
Other financial liabilities 56 002 81 555 57 019
Deferred tax 93 712 84 884 93 044
Other non-current liabilities 2 475 1 054 2 369
Loans from group companies 529 - 1 016
Current liabilities 162 649 224 533 165 971
Trade and other payables 68 728 119 779 59 372
Other Financial Liabilities 9 298 20 461 17 035
Other current liabilities 245 6 378 788
Provisions 15 968 3 800 23 571
Bank overdraft 49 179 57 062 43 587
Tax 19 231 17 053 21 618
Liabilities of disposal groups - - 11 741
classified as held for sale
TOTAL EQUITY AND LIABILITIES 850 903 723 457
710 497
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Outside Total
Attributable
To Equity
Shareholders
Parent interest
R 000`s R 000`s R 000`s
Balance at 1 September 2008 455 949 -6 359 449 590
Loss/(profit) for the year -58 941 169 -58 772
Issue of preference shares in - 634 634
subsidiary
Treasury shares -200 - -200
Dividends paid - -679 -679
Business combinations -2 569 4 293 1 724
Balance at 31 August 2009 394 239 -1 942 392 297
Net profit for the period 3 485 173 3 658
Dividends paid - -825 -825
Balance at 28 February 2010 397 724 -2 594 395 130
ABRIDGED GROUP STATEMENT OF CASH FLOWS
Audited
Unaudited Unaudited
28 28 31 August
February February 2009
2010 2009
R`000 R`000 R`000
CASH FLOW FROM OPERATING -14 770 -56 111 1 586
ACTIVITIES
CASH FLOWS FROM INVESTING 10 730 -76 448 -22 749
ACTIVITIES
CASH FLOWS FROM FINANCING -20 657 56 102 23 914
ACTIVITIES
(Decrease)/Increase in cash and -24 697 -76 457 2 751
cash equivalents
Cash and cash equivalents at the 7 468 36 099 4 717
beginning of the period
CASH EQUIVALENTS AT THE END OF -17 229 -40 358 7 468
THE PERIOD
SEGMENTAL ANALYSIS
Financial Informatics Fishing Healthcare
Services
Unaudited Unaudited Unaudited Unaudited
28 Feb 2010 28 Feb 2010 28 Feb 28 Feb
2010 2010
R`000 R`000 R`000 R`000
Revenue 8 928 50 553 78 574 5 749
Segment Result
Operating -4 276 3 760 4 124 -4 196
profit/(loss)
Carrying amount of 24 425 42 306 267 591 36 348
Assets
Carrying amount of 56 792 35 587 143 858 56 517
Liabilities
Profit/(Loss) from - - - -
equity accounted
investments
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
28 Feb 2010 28 Feb 2010 28 Feb
2010
R`000 R`000 R`000
Revenue - 24 168 167 972
Segment Result
Operating - 13 12 428 11 827
profit/(loss)
Carrying amount of 144 993 194 834 710 497
Assets
Carrying amount of 7 351 15 260 315 365
Liabilities
Profit/(Loss) from -3 365 - -3 365
equity accounted
investments
Financial Informatics Fishing Healthcare
Services
Unaudited Unaudited Unaudited Unaudited
28 Feb 2009 28 Feb 2009 28 Feb 28 Feb
2009 2009
R`000 R`000 R`000 R`000
Revenue 5 432 71 182 65 954 6 817
Segment Result
Operating 4 490 10 541 - 86 -3 015
profit/(loss)
Carrying amount of 33 862 59 427 409 127 72 734
Assets
Carrying amount of 56 438 43 557 145 687 46 455
Liabilities
Profit/(Loss) from - 6 599 - -
equity accounted
investments
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
28 Feb 2009 28 Feb 2009 28 Feb
2009
R`000 R`000 R`000
Revenue - 34 148 183 533
Segment Result
Operating - 23 2 278 14 185
profit/(loss)
Carrying amount of 185 308 90 445 850 903
Assets
Carrying amount of 49 223 50 666 392 026
Liabilities
Profit/(Loss) from -1 655 - 4 944
equity accounted
investments
Note
1. Operating profits/(losses) are stated
after elimination of management fees.
Calculation of Headline Earnings
Unaudited Unaudited Audited
28 28 31
February February August
2010 2009 2009
Notes R`000 R`000 R`000
Earnings/(loss) attributable IAS 33 3 485 9 909 -58 941
to ordinary equity holders
of parent entity
Adjusted for:
Impairments of property, IAS 16/IAS - - 31 675
plant and equipment 36
Impairments of intangible IAS 38/IAS - - 18 713
assets 36
Gains on disposal of IAS 36 i -2 365 -2 302 -1 935
property, plant and
equipment
Gains on disposal of IFRS3 - -4 918 1 429
subsidiaries
Impairment of goodwill IFRS3 - - 3 425
Impairments of other IAS36 - - 13 205
financial instruments
Headline earnings 1 120 2 689 7 571
Notes:
This profit arose from the disposal of the
Head office building in Tokai, Cape Town as
a result of restructuring within group.
Additional financial information:
Included in the income statement is R12,75m
of fair valuation adjustments to the Group`s
investments. Refer to segment report for
fair valuations within each division.
The Group is carrying its investment in
associate, namely, Bioclones (Pty) Ltd, at
cost because of the complexities and
subjectivity involved in determining a fair
value for the business.
Basis of preparation of financial statements
The abridged consolidated financial
information has been prepared in accordance
with IAS 34 - Interim financial reporting
and is based on the unaudited financial
statements of the Group for the six months
ended 28 February 2010, which have been
prepared in accordance with International
Financial Reporting Standards ("IFRS"), the
Listings Requirements of the JSE Limited,
and the Companies Act of South Africa, as
amended.
The unaudited financial results for the six
months ended 28 February 2010 have been
prepared in accordance with the Group
accounting policies, which comply with IFRS
and are consistent with those applied in the
previous financial period.
OVERVIEW
CORPORATE PROFILE
Sekunjalo is a black controlled investment
holding company incorporated in the Republic
of South Africa and is listed on the JSE
Limited ("JSE").
The Group has investments in the following
sectors: Fishing, Aquaculture, Information
Communication Technology; Pharmaceuticals
and Biotechnology.
EMPOWERMENT PARTNER OF CHOICE
Sekunjalo is:
ranked as South Africa`s Top Empowered
Company for 2010 by the authoritative
Financial Mail/Empowerdex Top Companies
Awards;
KEY FINANCIAL HIGHLIGHTS
The results are in line with expectations
set to bring all operations to a
strengthened position. The process of
restructuring has been successfully
completed. The major changes to note are
summarised as follows:
The total liabilities for the Group have
decreased by 28% to reflect better debt
management;
The financing cost of debt has also declined
in line with our strategy; and
The net cash effect of the Group has
positively increased by R23 million.
The Group is currently showing the expected
signs of recovery with a profit of R3,6
million for the period under review despite
the impact of the global economic crisis on
the local and export markets.
Reporting revenue is down compared to the
prior period due to the disposal of one of
the IT businesses as well as the impact of
the stronger rand on exports in the fishing
sector.
The Group is satisfied that the Fishing,
Aquaculture, ICT and pharmaceutical
businesses are showing satisfactory
performances for the interim period. The
Group is confident that the strategic
initiatives implemented by the divisions are
in line to overcome their current positions.
The Group`s net asset value has improved
since the last financial year-end.
REVIEW OF INVESTMENTS
FISHING
Premier Fishing SA (Pty) Ltd ("Premier
Fishing") has performed satisfactorily
despite the effects of the stronger rand on
sales and the depressed international prices
due to the global economic slowdown. The
restructuring process of Premier Fishing has
successfully been completed and a strong
dynamic management team is in place. Interim
results show Premier Fishing making an
operating profit of R4,1 million in
comparison to its breakeven results in the
previous interim period.
The West Coast Rock Lobster`s catches have
improved from the comparative period.
However, this has been negatively impacted
by the stronger rand. Catches are expected
to further improve, which will enhance the
division`s performance in the short to
medium term. Sales are expanding into the
Far Eastern markets.
The South Coast Rock Lobster division has
performed well and has seen prices in US
dollar terms improve after a significant
drop in the aftermath of the global
financial crisis. This has been negatively
impacted by the stronger rand. Demand is
still strong and greater efficiency on the
distribution is expected after improved
terms where negotiated with international
distributors.
The pelagic division is still facing
challenges and is in the process of being
restructured. Further investment into this
sector in partnership with other enterprises
is being planned. This will strategically
position the division for growth in the
medium to long term.
The squid catches have been in line with
expectations but selling prices have been
under significant pressure and have been
negatively affected by the stronger rand.
Premier Fishing is well positioned to take
advantage of future growth opportunities due
to its strong empowerment credentials and
low gearing. Management is continually
looking for new opportunities to expand
their fishing portfolio and maintain good
relations with various industry
stakeholders.
AQUACULTURE
The Group`s strategy to previously invest in
the abalone division continues to deliver
sustainable earnings year on year and
exceeded its sales volume for the six months
under review. However, the stronger rand has
affected the division`s earnings. The
abalone farm in Gansbaai is now at operating
at greater capacity and is capable of
satisfying demand for the Asian markets.
Seagro, the organic fertiliser, continues to
have a strong market presence and
performance.
The division is now reaping the benefits of
economies of scale after consolidating all
its operations into the Gansbaai operation.
The demand for the highly sought after
commodity still remains high from the
Eastern markets.
Management is continually pursuing
opportunities to expand on the current
operations.
INFORMATION COMMUNICATION TECHNOLOGY
Sekunjalo Technology Solutions Group Limited
(Pty) Ltd ("Sekunjalo TSG") is a wholly
owned subsidiary of Sekunjalo and focuses on
acquiring and growing niche-market
technology companies.
Sekunjalo TSG continues to perform well,
with subsidiaries that are cash positive and
has strong statements of financial position.
The Group has performed well despite the
failure of the Gauteng Department of Health
("GDOH") to honour its obligations in its
contract with Amethst (Pty) Ltd ("Amethst").
Revenue is well ahead of targets for the
period under review. The decline in revenue
in comparison with the previous period is
mainly due to the sale of one the subsidiary
companies through a management buy-out and
the cancelation of the GDOH`s contract.
The total debt in the Sekunjalo TSG Group
has decreased by 34%, indicating that the
debt management within the Sekunjalo TSG
Group has improved as well as the Group`s
ability to fund its own operations.
Total assets in the Group have decreased by
29%, due to the buy-out in the preceding
year. The Sekunjalo TSG Group maintains a
strong statement of its financial position.
FIOS (Pty) Ltd, is a leading provider of
corporate performance management solutions
offering both business intelligence and
financial solutions and continues to perform
well despite the initial slow start to the
period.
Saratoga Software (Pty) Ltd, a software
development company that builds custom
software solutions for corporate customers,
has built on their previous successes and
has been awarded additional medium-term
contracts, despite various clients being
faced with severe budget cuts. Saratoga is
operating well above targets.
Digital Matter (Pty) Ltd, is an innovative
technology company providing software
solutions for a wide range of industry
applications. As a Gold Certified Microsoft
Partner in Mobility Competencies, they
utilise the full range of the latest
Microsoft technologies in products and
solutions. Digital Matter has exceeded
expectations with revenues increasing by
40%. Acquired in March 2009, Digital Matter
has proven itself in the market by acquiring
significant contracts with reputable
clients.
Health System Technologies (Pty) Ltd
("HST"), a Hospital Information System
("HIS") provider, continues to rollout HIS
to the Provincial Government hospitals. The
business has consistently performed well
over the past few years, with the exception
of Amethyst due to the cancellation of the
contract with GDOH, which resulted in a
decrease in sales of 33% resulting in an
operating loss of R1.2millon. Management has
implemented a strategic plan where it is
anticipated that HST will meet its targets
by year-end.
British Telecom Communication Services South
Africa ("BT") one of the world`s leading
providers of communication solutions and
services operating in 170 countries,
continues to perform well, despite the
economic climate. Its principal activities
includes the provision of networked IT
services globally; local, national and
international telecommunications services to
customers for use at home, work and on the
move; broadband and internet products and
services; and converged fixed/mobile
products and services.
The value of our investment has increased by
12% in comparison to the previous reporting
period. It is well positioned to grow
aggressively over the next few years.
PHARMACEUTICALS
The Health Care Division continues to show
increased efforts with the strong management
team and good portfolio of products by
securing its supply chain, throughput and
driving the implementation of its sale
strategy. In the current year the Group
commenced the launching of consumer products
to pharmaceutical retail outlets. The first
product of this range was successfully
launched in March.
The Group has also been awarded a public
tender on its ethical products. Management
has pursued opportunities to expand its
current portfolio which will provide a
better platform for future growth.
BIOTECHNOLOGY
Bioclones (Pty) Ltd ("Bioclones") has 22
global patents in the areas of novel
technologies, infectious disease and cancer
treatment molecules.
The manufacturing cell culture facility in
Pretoria is continuing its development to
increase production at this facility.
Bioclones is seeing improved uptake in both
the private and state sectors due to the
competitive price of the locally
manufactured product, RepotinRegistered.
Bioclones continues to prepare for the
company`s listing of the company on an
international stock exchange subject to
market conditions. Investor appetite is
slowly improving abroad, however market
conditions are not yet optimal and the
company is carefully monitoring the economic
conditions to ensure the most favourable
valuation associated with the listing of
Bioclones.
FUTURE PROSPECTS
Sekunjalo is firmly established as the pre-
eminent black empowerment group continuously
looking for strategic opportunities. With
low gearing the Group is well positioned to
fund future growth of its businesses and to
unlock value in its underlying investments.
The Aquaculture division is properly
resourced to take advantage of the expansion
in the Far Eastern markets. The restructure
of the pelagic division within the Fishing
business will revitalise the pelagic sector.
The strong recovery in the dermatological
and pharmaceutical division will start
reaping the rewards going forward.
The continuous investment in our employees,
the community and our sustainability
programmes has enabled the Group to actively
be involved in improving the economy of the
country.
Sekunjalo has strong B-BBEE credentials and
has become a partner of choice to
multinationals.
Our World Economic Forum Global status
provides a network platform with the
international business community which
brings strategic partners and opportunities
for the Group.
Dividends
No dividends have been declared for the
current period. The Board continues to work
towards payment of dividends in the
foreseeable future.
APPRECIATION
We wish to extend my sincere gratitude to
our Board of Directors, the Group
Executives, the management and staff within
the Group for their loyalty, dedication and
unselfish commitment in meeting the business
challenges of the past six months. Our
appreciation also goes to our business
partners for their support during this
period.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that Sekunjalo has
entered into negotiations with a third
party, which, if successfully concluded may
have a material effect on the price of the
company`s securities. Accordingly,
shareholders are advised to exercise caution
when dealing in the company`s securities
until a full announcement is made.
MI Surve K Abdulla
Executive chairman Chief executive
officer
Cape Town
11 May 2010
Directors
*Dr M Iqbal Surve (Executive Chairman);
*Khalid Abdulla; Reverend Vukile Mehana,
Mihe Gaomab, The First; Salim Young; *Cherie
Felicity Hendricks; *Chantelle Ah Sing
*Executive Directors
Company secretary: Cherie Felicity Hendricks
Registered Address: Quay 7, East Pier,
Victoria and Alfred Waterfront, Cape Town,
8001,
email: cherieh@sekunjalo.com
Transfer secretaries: Link Market Services
South Africa (Pty) Ltd,
11 Diagonal Street, Johannesburg
Sponsor: PSG Capital (Pty) Ltd, Stellenbosch
Date: 11/05/2010 16:45:01 Supplied by www.sharenet.co.za
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