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CULCULP - Cullinan Holdings Limited - Unreviewed condensed consolidated results
for the six months ended 31 March 2012
CULLINAN HOLDINGS LIMITED
Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)
("Cullinan" or "the company" or "the group")
CULLINAN HOLDINGS LIMITED TOURISM AND LEISURE
UNREVIEWED CONDENSED CONSOLIDATED RESULTS
FOR THE SIX MONTHS ENDED 31 MARCH 2012
GROUP FINANCIAL HIGHLIGHTS
Attributable earnings - up 75%
Headline earnings - up 75%
Profit before taxation - up 70% to R29,7 million
Cash resources - increased by R37,4 million
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
Unreviewed Unreviewed Reviewed
six months six months year ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
ASSETS
Non-current assets 134 135 124 694 123 258
Property, plant and equipment 71 578 61 163 58 702
Goodwill 33 837 33 618 33 786
Intangible assets 15 644 19 615 18 043
Investment properties 5 700 3 900 5 700
Investment in associate companies 2 968 3 023 2 952
Investment in joint venture 3 097 2 096 2 764
Deferred tax asset 1 311 1 279 1 311
Current assets 259 991 212 190 314 963
Inventories 16 569 16 197 18 165
Accounts receivable 86 998 76 720 110 575
Other financial asset - - 4 395
Taxation 711 1 216 1 999
Cash resources 155 713 118 057 179 829
Non-current assets held for sale 2 200 4 000 2 200
Total assets 396 326 340 884 440 421
EQUITY AND LIABILITIES
Ordinary shareholders` equity 175 605 151 154 161 139
Preference shareholders` equity 546 546 546
Non-controlling interest 19 1 19
Total shareholders` equity 176 170 151 701 161 704
Non-current liabilities 17 571 16 105 17 373
Deferred tax liability 5 709 3 969 5 200
Operating lease accrual 11 362 11 636 11 673
Preference shares 500 500 500
Current liabilities 202 585 173 078 261 344
Operating lease accrual 55 50 31
Accounts payable 197 862 162 205 259 572
Bank overdrafts 238 - 243
Taxation 2 840 2 705 67
Preference dividends 15 15 15
Provisions 1 575 8 103 1 416
Total equity and liabilities 396 326 340 884 440 421
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unreviewed Unreviewed Reviewed
six months six months year ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
Revenue 236 608 197 961 393 747
Turnover 233 770 196 439 390 783
Net operating expenses (207 198) (180 252) (363 531)
Operating profit 26 572 16 187 27 252
Finance income 2 838 1 522 2 964
Finance expenses - (136) (151)
Preference dividends paid (24) (24) (55)
Share of profit/(loss) of 16 (197) (214)
associates
Share of profit of joint venture 334 167 781
Profit before taxation 29 736 17 519 30 577
Tax expense (8 017) (5 072) (8 502)
Profit for the period 21 719 12 447 22 075
Other comprehensive income:
Exchange differences on (69) 3 (228)
translating foreign operations
Revaluation of land and buildings - - 606
Total comprehensive income for 21 650 12 450 22 453
the period
Profit attributable to:
equity holders 21 719 12 447 22 057
non-controlling interest - - 18
Total comprehensive income
attributable to:
equity holders 21 650 12 450 22 435
non-controlling interest - - 18
Basic earnings per share (cents) 3,02 1,73 3,07
Diluted earnings per share 3,02 1,73 3,07
(cents)
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
Unreviewed Unreviewed Reviewed
six months six months year ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
Ordinary share capital
Balance at beginning of period 7 184 7 184 7 184
Issued during period - - -
Balance at end of period 7 184 7 184 7 184
Share premium
Balance at beginning of period 59 905 59 905 59 905
Premium on issue of shares - - -
Balance at end of period 59 905 59 905 59 905
Share capital reduction reserve
fund
Balance at beginning of period 20 876 20 876 20 876
Balance at end of period 20 876 20 876 20 876
Capital redemption reserve fund
Balance at beginning of period 4 4 4
Balance at end of period 4 4 4
Foreign currency translation
reserve
Balance at beginning of period (1 811) (1 583) (1 583)
Reserve on translation of foreign (69) 3 (228)
subsidiary
Balance at end of period (1 880) (1 580) (1 811)
Revaluation reserve
Balance at beginning of period 870 264 264
Reserve on translation of foreign - - 606
subsidiary
Balance at end of period 870 264 870
Accumulated profit/(loss)
Balance at beginning of period 74 111 52 054 52 054
Attributable income for period 21 719 12 447 22 057
Ordinary dividend paid (7 184) - -
Balance at end of period 88 646 64 501 74 111
Ordinary shareholders` equity 175 605 151 154 161 139
Preference shareholders` equity
Balance at beginning of period 500 500 500
Balance at end of period 500 500 500
Non-controlling interest
Balance at beginning of period 19 1 1
Profit attributable to non- - - 18
controlling interest
Balance at end of period 19 1 19
Total comprehensive income
Profit for period 21 719 12 447 22 075
- Attributable to equity 21 719 12 447 22 057
shareholders
- Attributable to non-controlling - - 18
interest
Translation of foreign subsidiary (69) 3 (228)
Revaluation of land and buildings - - 606
21 650 12 450 22 453
GROUP CONDENSED STATEMENT OF CASH FLOWS
Unreviewed Unreviewed Reviewed
six months six months year ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
Net cash (outflow)/inflow from 2 430 20 529 85 490
operating activities
Net cash outflow from investing (19 357) (741) (4 173)
activities
Net cash outflow from financing (7 184) - -
activities
Net (decrease)/increase in cash (24 111) 19 788 81 317
and cash equivalents
Cash and cash equivalents at 179 586 98 269 98 269
beginning of the period
Cash and cash equivalents at end 155 475 118 057 179 586
of the period
NOTES
1. Basis of preparation
The unreviewed condensed consolidated interim results for the six months
ended 31 March 2012 have been prepared in compliance with International
Financial Reporting Standards ("IFRS"), the AC 500 Standards as issued by
SAICA, with IAS 34 Interim Financial Reporting and the South African
Companies Act (71 of 2008, as amended). The policies are consistent with
those of the previous annual financial statements.
The unreviewed condensed consolidated interim results for the six months
ended 31 March 2012 have been prepared under the supervision of D Standage,
CA(SA), the financial director of the group.
2. Notes to the income statement
Unreviewed Unreviewed Reviewed
six months six months year ended
31 March 31 March 30 September
2012 2011 2011
Ordinary shares (`000)
- In issue 718 355 718 355 718 355
- Weighted average 718 355 718 355 718 355
R`000 R`000 R`000
Determination of headline
earnings:
Earnings attributable to ordinary 21 719 12 447 22 057
shareholders
(Profits)/Losses on disposal of - - 105
property, plant and equipment
Total tax effect of the - - (29)
adjustments
Headline earnings 21 719 12 447 22 133
Headline earnings per share 3,02 1,73 3,08
(cents)
Diluted headline earnings per 3,02 1,73 3,08
share (cents)
Net asset value per share (cents) 24,52 21,12 22,51
3. JSE Limited
The directors of the company ensured compliance with the JSE Limited
Listings Requirements during the period under review.
4. Business Combinations
The group acquired the business of Ikapa Tours and Travel (Pty) Limited as
a going concern, the business comprising the fixed assets, trading name,
client base and staff employed by Ikapa at 1 November 2011. The effective
date of the transaction was 1 November 2011. Ikapa is an inbound tour
operator and coach charter operator based in Cape Town.
Cullinan paid R14,5 million for the business, funded out of cash reserves.
The purchase price was for the fair market value of the fixed assets which
comprise coaches, vehicles, computer equipment and furniture and fittings.
The business was acquired as it combines well with the existing Cullinan
structure which comprises similar business and will add to buying power and
operational synergy and cost saving.
The following information summarises the effect of the transaction:
R`000
Property, plant and equipment (motor vehicles, computer 14 500
equipment and furniture and fittings)
Purchase price paid 14 500
Since the acquisition date, the following amounts have been
included in the statement of comprehensive income for the
period:
R`000
Revenue 10 044
Operating profit 88
Information relating to the revenue and profit/loss of Ikapa prior to this
acquisition has not been disclosed as the directors are of the opinion that
it is impractical to provide this information.
In addition, this information would be of no value to the users of these
financial statements as the business of Ikapa Travel and Tours (Pty)
Limited was materially restructured during the period from June 2011
through to October 2011 and the business acquired is substantially
different to that prior to 1 November 2011.
5. Segmental reporting
Tour Transport Retail
Operators & Touring Travel
R`000 R`000 R`000
31 March 2012
Revenue 92 669 68 993 51 797
Operating profit 20 455 8 614 7 451
31 March 2011
Revenue 71 883 52 018 48 910
Operating profit 13 688 7 316 7 821
30 September 2011
Revenue 147 274 97 842 101 589
Operating profit 21 340 9 977 13 380
Marine & Head
Boating Office Total
R`000 R`000 R`000
31 March 2012
Revenue 23 154 (5) 236 608
Operating profit (197) (9 751) 26 572
31 March 2011
Revenue 25 040 110 197 961
Operating profit 920 (13 558) 16 187
30 September 2011
Revenue 46 831 211 393 747
Operating profit (408) (17 037) 27 252
OVERVIEW
We are pleased to announce the results for the Cullinan group for the six-month
period ended 31 March 2012. During the period, sales increased by 20% and profit
before tax increased by 70% to R29,7 million (2011: R17,5 million) while
headline earnings increased by 75% to R21,7 million (2011: R12,4 million). Cash
generation remains strong with a substantial increase in cash resources, with
cash on hand at 31 March 2012 amounting to R155 million (March 2011: R118
million).
The company also resumed payments of dividends in the period with the
declaration of a dividend of 1 cent per share.
The above results are pleasing considering that the economy and general industry
environment remains challenging, particularly for the Inbound and coaching
businesses where the economic malaise in Europe and the UK has impacted sales.
The local economy remains fairly resilient and the Outbound Travel & Tourism
divisions have seen some recovery with a resultant moderate increase in sales in
the retail and wholesale businesses.
The group has also seen a marked improvement in operating effectiveness,
efficiencies and improved service levels over the past three years and, as a
consequence, the focus during the period has been on consolidating these
improvements while, at the same time, looking to secure new opportunities for
growth and expansion. During the period under review, Thompsons Africa
successfully fulfilled its responsibilities as the sole accommodation booking-
provider for the COP17 World Climate Change Summit held in Durban in November
2011. The COP17 conference was a great success for South Africa, as was
Thompsons` important role in ensuring this success. During the 12-night event,
Thompsons successfully managed the accommodation arrangements for 7 500
passengers, handling 60 000 bed nights.
During the period the company also acquired the business and assets of Ikapa
Tours and Travel (Pty) Limited effective 1 November 2011 and was appointed as
the exclusive sales and reservations provider for Lux Resorts in Mauritius under
the Island Light Holidays brand. In addition, the company was appointed as the
fulfilment product partner for the SAA Holidays programme for South Africa.
REVIEW OF OPERATIONS
Cullinan Tour Operators
The Outbound divisions consist of business units which supply travel-related
products and holidays to the South African market through its customer, the
retail travel agent. Over the last two years, the group has expanded this
segment of the business by establishing a number of different outbound
operators, of which Thompsons Holidays is the largest. Island Light Holidays
commenced operations in September 2011, with the exclusive contract to sell Lux
Resorts properties in Mauritius, Seychelles and Maldives. The group also
tendered for the contract to be the sole product partner for SAA Holidays and
was awarded this contract which will commence in May 2012.
While the business remains very competitive with relatively small barriers to
entry, the Outbound divisions have seen reasonable increases in revenue through
increasing its market share.
The Inbound divisions consist of business units which act as tour wholesalers
and destination marketing organisations that sell South & Southern African
travel packages to International Travel wholesalers, who in turn sell this on to
international tourists. Sales continue to feel the effects of an uncertain
economy in traditional markets such as the UK and Europe, while there has been a
noticeable upturn out of Asia and the USA looks positive. Thompsons Africa,
Planet Africa and Ikapa Inbound are the major brands within this segment.
Despite the challenging sales environment the businesses continue to produce
good results through efficient systems, good cost management and retaining
market share.
Cullinan Retail Travel
The Cullinan retail travel agency segment comprises Thompsons Corporate Travel,
Thompsons Leisure Travel, Visions Incentive Travel and Pentravel. Combined,
these three brands have over 30 travel agencies in most major centres in South
Africa.
The Corporate division has seen very good growth in the period in both sales and
profitability. This has been achieved through a combination of increased spend
as corporates have resumed travel and through the business securing a number of
new accounts. The performance of the Leisure division has been lagging that of
2011 although it looks to be back on track for the second half of 2012.
Pentravel continues to perform well against a record year in 2011.
Cullinan Transport and Touring
This segment comprises Hylton Ross Tours and Ikapa Coach Charter within South
Africa and, through a partnership with Wilderness Safaris, includes operations
in Zimbabwe, Zambia and Botswana. Through the various brands, the group owns and
operates a fleet of over 150 vehicles, comprising coaches, mini-buses, safari
vehicles and sedans. These vehicles are chartered to the Inbound and Domestic
tourism market. In addition, the various brands also provide day tours and
excursions in the eight centres in Southern Africa in which they operate.
The coaching segment was affected by a surplus of vehicles after the 2010 FIFA
World Cup and reduced demand from Inbound Tour Operators for reasons explained
above. This has been compounded by increased costs, specifically fuel. However,
it is pleasing to note that the business continues to offer very good returns on
investment as a result of high service standards and good management and has
resulted in an improvement on the prior year.
Cullinan Marine and Boating
The Marine segment comprises Manex Marine and Central Boating, both suppliers to
the boat-building industry. Manex also acts as an agency for Marine & Leisure
brands such as Aqualung diving equipment. As mentioned in prior reports, the
global demand for boat building dropped dramatically in 2008 and has yet to
recover. This has been compounded by the relatively strong Rand during the
period under review, which has made South African boat building struggle for
advantage.
Cullinan Business Development
This division was established in 2010 to focus on corporate social
responsibility for the group. This includes enterprise development, corporate
social investment and other aspects that allow the group to contribute to social
development in South Africa. To date it has been active in a number of areas
such as development of emerging travel agencies, supporting enterprise
development and commencing a learnership programme.
Prospects
Whilst the general economic environment continues to present challenges, the
group has performed well over the past six months and the group is well-placed
to continue to do so in future. Looking forward, the Board has identified a
number of opportunities to ensure the group remains a market leader in Southern
Africa. These include:
- Significant capital investment in a new ERP system for the wholesale travel
businesses (Inbound and Outbound). This investment will provide greater
efficiency and service to customers, but equally provides a platform which
will meet the current and future requirements for the business.
- Significant capital investment in the Transport segment of the business
through additional capital expenditure in coaches for Hylton Ross Tours and
Ikapa.
- New depot facilities are being developed for the group in Cape Town and
Johannesburg, which will provide the group with state of the art facilities
for the coaching division and create the capacity to increase its fleet.
Both depots will be completed by November 2012.
- New offices are being built in Cape Town for the group. These offices will
house the Thompsons Holidays reservations office, Pentravel marketing as
well as Thompsons Travel retail and corporate travel agencies, further
enhancing co-operation and synergy for the group. These offices are
expected to be completed in March 2013.
The company will continue to look for meaningful acquisition opportunities.
On behalf of the Board
M Tollman DK Standage
Executive Chairman Financial Director
30 May 2012
Auditors:
Mazars were re-elected as auditors in 2012.
Sponsor:
Arcay Moela Sponsors (Proprietary) Limited
(Registration number 2006/033725/07)
Directors:
M Tollman
MA Ness*
DD Hosking*
LA Pampallis
G Tollman*
DK Standage
DT Madlala+
R Arendse+
S Nhlumayo+,
A Azoulay+
*Non-resident
Non-Executive
+Independent Non-Executive
Company secretary:
B Allison
Registered office:
6 Hood Avenue, Rosebank, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
For further information on group activities, please write to:
The Company Secretary, Cullinan Holdings Limited
PO Box 41032, Craighall, 2024
Date: 30/05/2012 07:05:01 Supplied by www.sharenet.co.za
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