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SEKUNJALO INVESTMENTS LIMITED - Unaudited interim results for the period ended 28 February 2013

Release Date: 18/04/2013 12:41
Code(s): SKJ     PDF:  
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Unaudited interim results for the period ended 28 February 2013

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 interim results for the period ended 28 February 2013



Condensed Group Statement of Comprehensive Income


                                                Unaudited      Unaudited     Audited

                                                 Group to       Group to    Group to

                                              28 February    29 February   31 August

                                                     2013           2012        2012

                                                    R'000          R'000       R'000



Revenue                                           225 339        178 090     455 860

Cost of sales                                    (149 271)      (110 524)   (305 131)

Gross profit                                      76 068          67 566     150 729

Other income                                        3 834          1 745       3 700

Other operating expenses                          (63 103)       (53 060)   (125 252)

Fair value adjustments                            16 074          10 342      30 081

Investment revenue                                  4 768          3 175      17 334

Loss from equity accounted investments            (4 350)         (3 628)     (9 211)

Finance cost                                      (9 048)         (6 798)    (19 251)

Profit before taxation                            24 243          19 342      48 130

Taxation                                          (8 094)        (12 419)    (29 931)

Profit for the period                             16 149           6 923      18 199



Total comprehensive income                        16 149           6 923      18 199



Total comprehensive income/(loss)

  attributable to:

Equity holders of the parent                      16 134           9 159      17 953

Non-controlling interest                               15         (2 236)        246

                                                  16 149           6 923      18 199

Basic and diluted earnings per ordinary

  share (cents)                                      3,30         1,87        3,67




Weighted (and fully diluted) average

  number of ordinary shares in issue (000s)       489 339      489 339     489 339




Condensed Group Statement of Financial Position



                                                Unaudited    Unaudited     Audited

                                                 Group to     Group to    Group to

                                              28 February  29 February   31 August

                                                     2013         2012        2012

                                                    R'000        R'000       R'000



Assets

Non-current assets                                723 636      599 223     673 555

Property, plant and equipment                     139 792      139 786     135 500

Goodwill                                          34 191        34 191      34 191

Intangible assets                                 14 573        19 714      15 642

Investments in associates                         116 606      126 564     120 956



Other loan receivables                            61 969        45 668      25 322

Other financial assets                            330 525      207 991     314 451

Deferred tax                                      23 556        23 280      25 219

Operating lease asset                               2 424        2 029       2 274



Current assets                                    174 275      184 582     181 748

Inventory                                         25 234        20 173      17 851

Biological assets                                 38 787        35 027      38 537

Other financial assets                                939        3 886       1 464

Current tax receivable                                157          154         209

Trade and other receivables                       73 477        93 817      77 434

Cash and cash equivalents                         35 681        31 525      46 253



Total assets                                      897 911      783 805     855 303




Equity and liabilities

Equity

Equity attributable to equity holders

  of parent

Share capital and share premium                 403 177      403 177     403 177

Reserves                                        121 194      121 194     121 194

Accumulated losses                              (65 415)     (90 342)    (81 548)

                                                458 956      434 029     442 823

Non-controlling interest                          8 230        7 959       9 041

                                                467 186      441 988     451 864

Liabilities

Non-current liabilities                         272 113      190 455     253 872

Other financial liabilities                     147 490       83 683     129 949

Operating lease liability                           454          192         734

Deferred tax                                    123 830      104 739     123 189

Other non-current liabilities                       339        1 841           -




Current liabilities                             158 612      151 362     149 567

Trade and other payables                        73 867        74 237      85 806

Other financial liabilities                     24 323        15 636      37 784

Current tax payable                               5 849        8 739       2 593

Provisions                                      16 670        16 782      16 766

Other current liabilities                             -           71          51

Bank overdraft                                  37 903        35 897       6 567



Total equity and liabilities                    897 911      783 805     855 303



Net asset value per share (cents)                 93,79        88,70       90,49

Tangible net asset value per share (cents)        83,83        77,68       80,31



Condensed Group Statement of Cash Flows



                                              Unaudited    Unaudited     Audited

                                               Group to     Group to    Group to

                                            28 February  29 February   31 August

                                                   2013         2012        2012

                                                  R'000        R'000       R'000



Cash flows from operating activities              2 432        2 578      53 302

Cash flows from investing activities            (13 369)      (4 578)    (96 437)

Cash flows from financing activities              (30 971)       5 215       90 408

Total cash movement for the period                (41 908)       3 215       47 273

Cash and cash equivalent at the

  beginning of the period                         39 686        (7 587)      (7 587)



Cash and cash equivalents at the end of

  the period                                      (2 222)       (4 372)      39 686



Condensed Group Statement of Changes in Equity

For the period ended 28 February 2013



                                             Attributable         Non-

                                                       to  controlling        Total

                                                  parent      interest       equity

                                                    R'000        R'000        R'000



Balance at 1 September 2011                       424 870       10 195      435 065

Profit for the period                             17 953           246       18 199

Dividends paid                                          -       (1 400)      (1 400)

Balance at 31 August 2012                         442 823        9 041      451 864

Profit for the period                             16 134            15       16 149

Dividends paid                                          -         (827)        (827)

Balance at 28 February 2013                       458 957        8 230      467 186




Condensed Group Segmental Report



                                              Information

                                               Technology      Fishing   Healthcare

                                                Unaudited    Unaudited    Unaudited

                                                 Group to     Group to     Group to

                                              28 February  28 February  28 February

                                                     2013         2013         2013

                                                    R'000        R'000        R'000



Revenue                                           103 686       89 404        8 984

External sales                                    103 686       89 404        8 984

Segment results

Operating profit/(loss)                 26 625         3 430       (3 868)


Carrying amount of assets               68 283       250 705       31 622

Carrying amount of liabilities          33 541       124 498       11 888


                                  Biotechnology    Corporate        Group

                                      Unaudited    Unaudited    Unaudited

                                       Group to     Group to     Group to

                                    28 February  28 February  28 February

                                           2013         2013         2013

                                          R'000        R'000        R'000



Revenue                                       -       23 265      225 339

External sales                                -       23 265      225 339




Segment results

Operating profit/(loss)                      (4)       6 690       32 873



Included in segment results:

Fair valuation of investments                 -       16 074       16 074

Carrying amount of assets               177 435      369 866      897 911

Carrying amount of liabilities          24 909       235 889      430 725

Loss from associate                     (4 350)            -       (4 350)



                                    Information

                                     Technology      Fishing   Healthcare

                                      Unaudited    Unaudited    Unaudited

                                       Group to     Group to     Group to

                                    29 February  29 February  29 February

                                           2012         2012         2012

                                          R'000        R'000        R'000



Revenue                                 73 184        76 017        9 219

External sales                          73 184        76 017        9 219



Segment results

Operating profit/(loss)                 26 436         1 122       (2 592)

Carrying amount of assets                          79 711        250 348         35 072

Carrying amount of liabilities                     37 785        116 437         10 903



                                            Biotechnology      Corporate          Group

                                                Unaudited      Unaudited      Unaudited

                                                 Group to       Group to       Group to

                                              29 February    29 February    29 February

                                                     2012           2012           2012

                                                    R'000          R'000          R'000



Revenue                                                 -         19 670        178 091

External sales                                          -         19 670        178 091



Segment results

Operating profit/(loss)                                 -          1 627         26 593



Included in segment results:

Fair valuation of investments                           -         10 342         10 342

Carrying amount of assets                         172 229        246 385        783 805

Carrying amount of liabilities                     18 682        158 010        341 817

Loss from associate                                (3 628)             -         (3 628)




Notes



Revenue for the Fishing segment is highly seasonal. The majority of the sales occur in

the second half of the year. During the prior year annual external sales for the segment

amounted to R207m. The corresponding interim sales were R76m.



Determination of headline earnings



                                                Unaudited      Unaudited        Audited

                                                 Group to       Group to       Group to

                                              28 February    29 February      31 August

                                                     2013           2012           2012

                                                    R'000          R'000          R'000



Earnings attributable to ordinary

  equity holders of parent entity    IAS 33        16 134          9 159         17 953

Adjusted for:

Loss on disposal of property,

  plant and equipment                IAS 36            85              7            122

Impairment of intangible

  assets                             IAS 38             -              -            275




Headline earnings                                 16 219           9 166         18 350



Headline earnings per ordinary

  share (cents)                                      3,31           1,87           3,75




Basis of preparation



The condensed consolidated financial statements are prepared in accordance with the JSE

Limited ("JSE") Listings Requirements for preliminary reports and the requirements of

the Companies Act of South Africa, 2008 as amended, applicable to summarised financial

statements. The JSE Listings Requirements require preliminary reports to be prepared in

accordance with the framework concepts, the measurement and recognition requirements of

International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting

Guides as issued by the Accounting Practices Committee and also that they, as a minimum,

contain the information required by IAS 34 'Interim Financial Reporting'. The accounting

policies applied in the preparation of the summarised consolidated financial statements

from which the summary consolidated financial statements were derived are in terms of

IFRS and are consistent with the accounting policies applied in the preparation of the

previous consolidated annual financial statements.



The unaudited interim financial results were prepared by Takudzwa Hove BCom (Hons),
CA(SA)(ACMA).



Commentary



The Sekunjalo Group has delivered a satisfactory set of financial results for the
six-month period under review as the operations have performed in line with the
expectations.



There has been an increase in the net asset value ("NAV") as a result of an increase

in the value of the underlying investments and improving the performance of the
operations.

Key financial highlights



Group revenue has increased by 27% compared to the prior interim period from R178m to

R225m due to the improved operational performance of the underlying businesses.



Profit before taxation for the period has increased by 25% to R24m (2012: R19,3m)

as compared to the prior period which is due to the subsidiaries' consistent

performance as a result of the strategies implemented by management over the past

three years.



As a result, headline earnings have increased by 77% with headline earnings per share

("HEPS") growing by 1,44c from 1,87c in 2012 to 3,31c for the current period. Earnings

per share ("EPS") grew by 1,43c from 1,87c in 2012 to 3,30c for the current period.



If the dividend revenue was not taken into account from the interim prior period,

cash flows from operating activities has increased by R7m since prior period.




The Group's asset base has increased by R114m to R898m from R783m for the period

under review.



Net asset value ("NAV") per share grew to 93,79c from 88,70c in the prior period, while

tangible NAV per share grew to 83,83c from 77,68c for the prior period.



Financial liabilities increased by R72m during the period under review to fund

the growth of the Group's subsidiaries and associates.



The Information Technology Communication Group has achieved operating profits of R26m

which in line with prior interim period. This was obtained through the implementation

and roll-out of the long-term contracts secured during the prior financial years.



Premier Fishing SA (Pty) Ltd ("Premier Fishing") has achieved an operating profit for

the period of R3,4m. The major contributors being the south coast ("SCRL") and the

west coast rock lobster ("WCRL") divisions as well as improved operational

efficiencies.



The fishing sector generally performs better in the second half of the year due to the

seasonal nature of the industry.

Strategic investments



The Pioneer Food Group transaction concluded in the prior year has started to show

increased value at 28 February 2013.



Information technology and communication



Sekunjalo Technology Solutions Group (Pty) Ltd ("Sekunjalo TSG") is a wholly owned

subsidiary of Sekunjalo Investments Limited and focuses on the acquisition and

development of niche-market information and communication technology companies.



The ICT division has performed very well, with subsidiaries performing above targets,

and generating positive cash flow. The division s revenue has increased by 42% compared

to the corresponding interim period from R73m to R103m due to well-performing

businesses and efficiencies.



Saratoga Software (Pty) Ltd, a software development company which builds custom software

solutions for corporate customers, has grown consistently over the past few years and

is performing ahead of expectations.



Digital Matter (Pty) Ltd, an innovative technology company, providing mobile software

solutions for a range of industry applications including industrial plant and

equipment inspection and asset auditing is also performing above expectations.



Health System Technologies (Pty) Ltd ("HST"), a hospital information system ("HIS")

laboratory information system ("LIS") and pharmacy information system integrator and

provider, has continued to deliver steadily on its contract to roll out the centralised

HIS and Pharmacy solution to the Provincial Government of the Western Cape hospitals.



It successfully continues the implementation of the national centralised LIS for the

National Health Laboratory Services with 202 laboratories of the total 267 laboratories

already successfully rolled out.



Fishing



Premier Fishing has steadily maintained its performance with the major contribution

coming from the SCRL and WCRL division with good catching volumes to date and a weaker

rand. Interim results show an operating profit of R3,4m.

Aquaculture



The abalone division has produced good results in the first half of the year.

Management expect this trend to continue in the second half of the year.



Healthcare



The core dermatological range of products in the pharmaceutical division continues to

show improvement in performance, despite significant competition from generic

equivalents.



Biotechnology



Genius Biotherapeutics (formerly Bioclones), South Africa's largest medical biotechnology

company has continued with renovation work at the Centurion plant in order to commence

production.



Ribotech (Pty) Ltd ("Ribotech"), a subsidiary of Bioclones, has a production facility

for the manufacturing of Granulocyte-Colony Stimulating Factor ("G-CSF"), a product

used in the oncology market. The Ribotech facility continues its progress in its

research and development activities.



Media



espAfrika (Pty) Ltd, a Group subsidiary, has hosted the Cape Town International Jazz

Festival for the 13th year. The company's performance for the six months is an expected

operating loss as espAfrika has most of its events during the second half of the

financial year.



Events after reporting date



Subsequent to the reporting date, the Group acquired a 75% stake in World Wide Creative.

World Wide Creative is a digital marketing agency. This new investment will be managed

by Sekunjalo TSG.



Prospects



The Group will continue its focus to grow the ICT and Fishing divisions organically as

well as by acquisition as the operations continue to produce satisfactory results.

The ICT division has built a strong platform for further organic growth and has

positioned itself well to increase its investments by acquisition.



Amethst (Pty) Ltd - Parallel arbitration negotiations to resurrect the Gauteng

Department of Health and Social Development ("GDOHSD") Hospital Information System
("HIS") and Electronic Health Record ("EHR") contracts are ongoing.



As an investment holding group, we expect a challenging year for the global economy and

believe that our businesses will grow steadily from the successes of the past.



The Group's auditors have not reviewed nor reported on any comments relating to

future prospects.



Dividends



No dividends have been declared for the current period. The board continues to work

towards the payment of dividends in the foreseeable future.



Appreciation



We wish to acknowledge the support of our staff, Group executives, management, our board

of directors as well as our stakeholders and business partners for their loyalty and

dedication to the Group in producing these satisfactory results.



Dr MI Surve                                             Mr Khalid Abdulla

Executive chairman                                      Chief executive officer



Cape Town

18 April 2013



Directors

*Dr M Iqbal Surve (Executive chairman); *Khalid Abdulla (Chief executive officer);

Rev. Dr Vukile Mehana; Johannes Mihe Gaomab; Salim Young; Aziza Amod;

*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,

19 Ameshoff Street, 13th Floor, Rennie House, Braamfontein, Johannesburg 2000

Auditors: PKF (Cpt) Inc, Cape Town

Sponsor: PSG Capital, Stellenbosch


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