Wrap Text
Reviewed Consolidated Annual Results for the year ended 31 March 2013
SEARDEL INVESTMENT CORPORATION LIMITED
("Seardel" or "the Group")
Registration number: 1968/011249/06 (Incorporated in the Republic of South Africa)
JSE share code: SER ISIN: ZAE000029815
JSE share code: SRN ISIN: ZAE000030144
The company's shares are listed under the Consumer Goods - Personal and Household
Goods Sector of the JSE Limited.
REVIEWED CONSOLIDATED CONDENSED ANNUAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2013
Revenue up R7 million to R2 513 million
Net profit down R96 million to R41 million
Headline profit per share down 17,94 cents to 2,92 cents
Earnings per share down 13,51 cents to 5,96 cents
NAV per share up 13 cents to 214 cents per share
Adjusted EBITDA (excluding prior year settlement) up R111 million to R121 million
Adjusted net profit (excluding prior year settlement) up R96 million to R41 million
Adjusted headline profit per share (excluding prior year settlement) up 9,32 cents
to 2,92 cents
Seardel is a diverse investment group and a leading manufacturer and distributor of
branded, textile, industrial and apparel products.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed at Audited at
Rand thousands 31 Mar 2013 31 Mar 2012
ASSETS
Non-current assets 1 385 957 1 142 413
Property, plant and equipment 754 481 695 048
Plant and equipment 335 876 310 779
Owner-occupied properties 418 605 384 269
Investment properties 525 229 357 801
Intangible assets 13 030 10 563
Other investments 3 580 3 329
Long-term receivables 47 544 43 402
Deferred tax asset 42 093 32 270
Current assets 1 138 682 1 286 386
Non-current assets held for sale 2 295 12 906
Inventories 627 768 581 816
Trade and other receivables 504 788 688 644
Current tax asset 1 594 971
Cash and cash equivalents 2 237 2 049
Total assets 2 524 639 2 428 799
EQUITY AND LIABILITIES
Total equity attributable to equity holders 1 460 586 1 411 645
Share capital and share premium 312 156 304 620
Treasury shares (17 794) (14 610)
Reserves 1 166 224 1 121 635
Non-current liabilities 93 662 85 226
Deferred tax liability 8 400 8 725
Post-employment medical aid benefits 84 388 74 645
Interest-bearing liabilities 756 715
Operating lease accruals 118 1 141
Current liabilities 970 391 931 928
Post-employment medical aid benefits 5 045 4 662
Interest-bearing liabilities 298 25 427
Trade and other payables 460 008 437 830
Provisions 355 13 538
Bank overdrafts 504 685 450 471
Total liabilities 1 064 053 1 017 154
Total equity and liabilities 2 524 639 2 428 799
Net asset value 1 460 586 1 411 645
Net asset value per share after treasury shares (cents) 214 201
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed for Audited for
the year the year
ended ended
Rand thousands 31 Mar 2013 31 Mar 2012
Revenue 2 513 486 2 506 794
Gross profit 546 411 483 846
Operating profit before impairments and restructuring and
retrenchment costs 60 218 204 756
Net impairment reversal/(impairment) of assets 21 885 (1 250)
Restructuring and retrenchment costs (2 245) (24 491)
Operating profit before finance costs 79 858 179 015
Finance income 2 971 4 594
Finance expenses (43 095) (38 467)
Profit before taxation 39 734 145 142
Income tax income 1 117 13 131
Profit for the year from continuing operations 40 851 158 273
Loss for the year from discontinued operations - (21 442)
Income for the year 40 851 136 831
Other comprehensive income/(loss):
Revaluation of land and buildings 23 489 30 731
Post-employment medical benefit - actuarial loss (5 733) (4 170)
Other comprehensive income for the year 17 756 26 561
Total comprehensive income for the year 58 607 163 392
Income attributable to:
Equity holders of the parent 40 851 136 944
Non-controlling interests - (113)
Income for the year 40 851 136 831
Total comprehensive income attributable to:
Equity holders of the parent 58 607 163 505
Non-controlling interests - (113)
Total comprehensive income for the year 58 607 163 392
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Reviewed for Audited for
the year the year
ended ended
Rand thousands 31 Mar 2013 31 Mar 2012
Net cash flow from operating activities 202 584 39 386
Operating profit before finance cost from continuing
operations 79 858 179 015
Operating loss before finance costs from discontinuing
operations - (19 148)
Income for the year 79 858 159 867
Adjustments for:
Depreciation and amortisation 40 748 44 301
Revaluation of investment property 2 161 8 372
Foreign exchange gains/(losses) 3 936 (401)
(Surplus)/loss on disposal of property, plant and equipment (1 087) 420
Net impairment of property, plant and equipment (21 885) 1 250
Investment income (96) (78)
Post-employment medical benefit 2 164 2 282
Share incentive scheme 6 865 3 856
Change in non-current receivables (4 142) (8 146)
Net change in working capital 141 940 (124 930)
Net finance costs (40 124) (36 167)
Taxation paid (7 754) (11 240)
Net cash used in investing activities (210 751) (170 076)
Additions to plant and equipment (39 225) (47 272)
Additions to owner-occupied properties (65 480) (2 427)
Proceeds on disposal of property, plant and equipment 14 178 10 013
Additions to investment properties (104 496) (119 262)
Interest capitalised to investment properties (8 603) (5 956)
Additions to investments (251) -
Acquisition of intangible assets (6 970) (5 250)
Investment income 96 78
Net cash used in financing activities (45 859) (105 376)
Change in borrowings (25 088) (105 376)
Repurchase of own shares (20 771) -
Net change in cash and cash equivalents (54 026) (236 066)
Cash and cash equivalents at the beginning of the period (448 422) (207 242)
Cash in subsidiary disposed of - (5 114)
Cash and cash equivalents at the end of the period (502 448) (448 422)
Cash and cash equivalents comprise the following
Cash and cash equivalents 2 237 2 049
Bank overdrafts (504 685) (450 471)
(502 448) (448 422)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury Other
Rand thousands capital premium shares reserves
Balance at 31 March 2011 159 207 144 762 (14 610) 264 064
Total comprehensive income for
the year
Income for the year - - - -
Revaluation of land and buildings - - - 30 731
Post-employment medical benefit
- actuarial loss - - - -
Transfer to retained earnings
Reclassification of revaluation
surplus on disposal of land and
buildings - - - (676)
Transactions with owners recognised
directly in equity
Share-based payment transactions - - - -
Share issue 192 459 - -
Change in capital gains tax rate - - - (9 328)
Disposal of subsidiary - - - -
Balance at 31 March 2012 159 399 145 221 (14 610) 284 791
Total comprehensive income for
the year
Income for the year - - - -
Revaluation of land and buildings - - - 23 489
Post-employment medical benefit
- actuarial loss - - - -
Transfer to retained earnings
Reclassification of revaluation
surplus on disposal of land and
buildings - - - (9 611)
Transactions with owners recognised
directly in equity
Share-based payment transactions - - - -
Share issue 1 395 6 160 - -
Own shares acquired - - (20 790) -
Shares cancelled (19) 17 606 - (17 587)
Balance at 31 March 2013 160 775 151 381 (17 794) 298 669
Non-con-
Retained trolling
Rand thousands income Total interest Total
Balance at 31 March 2011 700 559 1 253 982 610 1 254 592
Total comprehensive income for
the year
Income for the year 136 944 136 944 (113) 136 831
Revaluation of land and buildings - 30 731 - 30 731
Post-employment medical benefit
- actuarial loss (4 170) (4 170) - (4 170)
Transfer to retained earnings
Reclassification of revaluation
surplus on disposal of land
and buildings 831 155 - 155
Transactions with owners recognised
directly in equity
Share-based payment transactions 3 205 3 205 - 3 205
Share issue - 651 - 651
Change in capital gains tax rate - (9 328) - (9 328)
Disposal of subsidiary (525) (525) (497) (1 022)
Balance at 31 March 2012 836 844 1 411 645 - 1 411 645
Total comprehensive income for
the year
Income for the year 40 851 40 851 - 40 851
Revaluation of land and buildings - 23 489 - 23 489
Post-employment medical benefit
- actuarial loss (5 733) (5 733) - (5 733)
Transfer to retained earnings
Reclassification of revaluation
surplus on disposal of land
and buildings 9 611 - - -
Transactions with owners recognised
directly in equity
Share-based payment transactions 3 569 3 569 - 3 569
Share issue - 7 555 - 7 555
Own shares acquired - (20 790) - (20 790)
Shares cancelled (17 587) - - -
Balance at 31 March 2013 867 555 1 460 586 - 1 460 586
CONSOLIDATED CONDENSED SEGMENTAL REPORT
Rand thousands Textiles Clothing Industrials Property
Operating segments
2013
Segment revenue
Gross revenue 689 207 694 611 334 988 93 225
Revenue reclassified as
discontinued operations - - - -
Inter-segment revenue (these
transactions are at arm's length) (39 207) - (6 350) (45 944)
Consolidated revenue 650 000 694 611 328 638 47 281
Segment results
Operating profit/(loss) before
finance costs from continuing
operations 31 362 (33 845) 17 046 63 554
Net finance costs - - - -
Profit/(loss) before taxation from
continuing operations 31 362 (33 845) 17 046 63 554
Segment assets 473 773 341 150 217 030 997 217
Segment liabilities 258 459 77 376 60 374 33 673
2012*
Segment revenue
Gross revenue 714 540 860 950 342 692 66 577
Revenue reclassified as
discontinued operations 3 (49 900) - -
Inter-segment sales (these
transactions are at arm's length) (43 391) - (4 447) (42 059)
Consolidated revenue 671 152 811 050 338 245 24 518
Segment results
Combined operating profit/(loss)
before finance costs 29 175 (122 144) 10 597 44 554
(Profit)/loss disclosed as
discontinued operations (excluding
finance charges and taxation) (1 505) 20 653 - -
Operating profit/(loss) before
finance costs from continuing
operations 27 670 (101 491) 10 597 44 554
Net finance costs - - - -
Profit/(loss) before taxation
from continuing operations 27 670 (101 491) 10 597 44 554
Segment assets 457 065 436 634 217 040 823 637
Segment liabilities 227 480 100 691 59 660 15 597
* Restated, refer note 3.
Branded
product
distri- Head
Rand thousands bution office Total
Operating segments
2013
Segment revenue
Gross revenue 795 416 - 2 607 447
Revenue reclassified as discontinued operations - - -
Inter-segment revenue (these transactions are
at arm's length) (2 460) - (93 961)
Consolidated revenue 792 956 - 2 513 486
Segment results
Operating profit/(loss) before finance costs
from continuing operations 15 474 (13 733) 79 858
Net finance costs - (40 124) (40 124)
Profit/(loss) before taxation from continuing
operations 15 474 (53 857) 39 734
Segment assets 456 915 38 554 2 524 639
Segment liabilities 114 169 520 002 1 064 053
2012*
Segment revenue
Gross revenue 662 558 - 2 647 317
Revenue reclassified as discontinued operations - - (49 897)
Inter-segment sales (these transactions are
at arm's length) (729) - (90 626)
Consolidated revenue 661 829 - 2 506 794
Segment results
Combined operating profit/(loss) before
finance costs 32 275 165 410 159 867
(Profit)/loss disclosed as discontinued
operations (excluding finance charges and taxation) - - 19 148
Operating profit/(loss) before finance costs
from continuing operations 32 275 165 410 179 015
Net finance costs - (33 873) (33 873)
Profit/(loss) before taxation from
continuing operations 32 275 131 537 145 142
Segment assets 427 891 66 532 2 428 799
Segment liabilities 113 477 500 249 1 017 154
* Restated, refer note 3.
STATISTICS PER SHARE
Reviewed at Audited at
In cents, where applicable 31 Mar 2013 31 Mar 2012
Weighted average number of shares ('000) 685 310 703 398
Net number of shares in issue ('000) 682 892 703 711
Diluted weighted average number of shares ('000) 710 913 727 060
Earnings per share 6,0 19,5
Headline earnings per share 2,9 20,9
Diluted earnings per share 5,8 18,8
Diluted headline earnings per share 2,8 20,2
Earnings adjusted for prior period settlement income
Earnings/(loss) per share 6,0 (7,8)
Headline earnings/(loss) per share 2,9 (6,4)
Diluted headline earnings/(loss) per share 2,8 (6,2)
Reconciliation between earnings, headline earnings and
adjusted headline earnings/(loss) (R'000)
Income attributable to shareholders 40 851 136 944
Net impairment of assets (21 885) 1 250
Remeasurements of investment property 2 161 8 372
Surplus on disposal of property, plant and equipment (2 099) (1 114)
Loss on disposal of property, plant and equipment 1 012 1 534
Insurance claim for capital asset - (247)
Total tax effect of adjustment - (3)
Headline earnings 20 040 146 736
Settlement - (191 773)
Adjusted headline earnings/(loss) 20 040 (45 037)
NOTES TO THE REVIEWED CONSOLIDATED CONDENSED RESULTS FOR THE YEAR ENDED 31 MARCH 2013
1 BASIS OF PREPARATION
These consolidated condensed results are prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards (IFRS), the presentation and disclosure requirements of International
Accounting Standard 34: Interim Financial Reporting and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the Listings Requirements of
the JSE Limited and the Companies Act, No. 71 of 2008.
2 ACCOUNTING POLICIES
The accounting policies adopted are in all respects consistent with those applied in
the preparation of the Group's annual financial statements for the year ended
31 March 2012.
3 CHANGES IN COMPARATIVES
The prior year's condensed segmental report has been restated due to the Group's
decision to change the composition of its reportable segments. The recomposition
reflects the underlying changes within the Group and provides improved reporting to
stakeholders. The restatement has no effect on the financial information other than
to the segmental report.
4 INDEPENDENT REVIEW
The consolidated statement of financial position at 31 March 2013 and the
consolidated condensed statement of comprehensive income, statement of changes in
equity, consolidated condensed statement of cash flows, consolidated condensed
segmental report and statistics per share for the year then ended have been reviewed
by KPMG Inc. Their unmodified report is available for inspection at the registered
office of the company.
5 CAPITAL EXPENDITURE AND COMMITMENTS
Capital Capital Contractual Contractual
expenditure expenditure commitments commitments
Rand thousands 31 Mar 2013 31 Mar 2012 31 Mar 2013 31 Mar 2012
Investment property 104 496 119 262 20 265 8 112
Land and buildings 65 480 2 427 - -
Plant and equipment 39 225 47 272 117 19 850
Intangible assets 6 970 5 250 1 356 760
Total capital expenditure 216 171 174 211 21 738 28 722
6 CONTINGENCIES
As detailed in the SENS announcements released on 16 March 2012 and 31 October 2012,
the company and several of its subsidiary companies settled the various litigation
proceedings and claims against former directors and officers of the company and
entities controlled by them. One of the properties included in the settlement,
namely remaining extent of Erf 27412, Observatory, Cape Town ("the Observatory
Property"), with an estimated market value of R38,7 million, remained the subject of
separate litigation by and against unrelated third parties. Judgment was delivered
in the company's favour in relation to the separate litigation (30 October 2012) and
a subsequent application to appeal the judgment was dismissed. The third parties
thereafter petitioned the Supreme Court of Appeal to grant leave to appeal.
Due to the ongoing and unresolved litigation proceedings pertaining to the matter
at year-end, the property has not been accounted for in the current year's results.
Refer to note 7 for events after the reporting period.
7 POST YEAR-END EVENTS
Subsequent to year-end, the litigation referred to in note 6 was resolved in the
company's favour further to the Supreme Court of Appeal dismissing the third parties'
application for leave to appeal. As a result thereof, the transfer of the Observatory
Property to the company, with a current estimated market value of R38,7 million is
in the process of being effected. (See SENS announcement dated 10 May 2013.)
Mr David Duncan has been appointed as an executive director of the company with
effect from 16 May 2013.
8 ISSUE AND REPURCHASE OF SHARES
14 513 649 ordinary shares and 11 885 606 N ordinary shares were repurchased from
the market in accordance with the settlement agreement as communicated in the
circular to shareholders dated 30 April 2012. 7 732 934 N ordinary shares were
cancelled subsequent to the repurchase. During the period 5 579 925 ordinary shares
were issued in terms of the Group's share incentive scheme.
9 DILUTED WEIGHTED AVERAGE NUMBER OF SHARES
The difference between the weighted average number of shares and the diluted
weighted average number of shares are due to the impact of the unexercised options
under the Group's share incentive scheme.
10 DIVIDEND
The directors have resolved not to declare a dividend for the year ended
31 March 2013 (2012: Nil).
11 PREPARATION
These results have been prepared under the supervision of the Group financial
director, Gys Wege CA(SA).
COMMENTARY
The Group reports income attributable to ordinary shareholders of R41 million
(2012: R137 million) and total comprehensive income of R59 million (2012: R163 million)
for the year ended 31 March 2013. The results are not comparable with the prior year
which contained R192 million of once-off income relating to the settlement of the
various litigation proceedings with former directors and officers of the Group as
announced on SENS on 16 March 2012. Excluding the effect of the settlement on the prior
year's results, this year's results represent a R96 million improvement year on year.
Group turnover was flat year on year, but significantly turnover from our manufacturing
entities was down 10% whilst turnover from our non-manufacturing entities climbed by
22%. This turnover shift has resulted in the Branded Product Distribution segment now
being the largest individual segment by turnover. The shift in turnover to higher
margin areas and improved margins in our Clothing segment drove overall margin
improvement, up 240 basis points to 21,7%. The improved margins were reinforced by
strict cost controls which saw all major cost lines coming in below the previous
year's levels.
SEGMENTS
In order to better disclose the nature of the underlying businesses within the Group,
the segmental reporting has been adjusted. The segmental report now comprises the
following segments:
- Branded Product Distribution: This segment incorporates the Group's toy, stationery,
electronics and branded apparel businesses;
- Clothing: This segment incorporates the Group's apparel manufacturing business;
- Textiles: This segment includes the Group's traditional textile operations, namely
Berg River Textiles, Hextex, Frame Knitting Manufacturers and Romatex Home Textiles;
- Industrials: This segment includes the Group's manufacturing businesses that
predominantly derive their revenue from industrial sectors including the automotive,
construction and mining industries. The businesses that fall within this segment are
our Gold Reef Speciality Chemicals, Brits Non-Wovens and Frame Polypropylene
businesses; and
- Properties: Both owner occupied and externally let.
BRANDED PRODUCT DISTRIBUTION SEGMENT
The performance of this segment is key to the revitalisation of the Group's overall
performance and remains an area of strategic focus. The businesses within this segment
recorded revenue growth of 20% to R795 million which has resulted in this segment now
being the largest by turnover.
The operating results were negatively affected by a R7 million foreign exchange loss
in the current period whilst the prior year's figures contained a R13 million foreign
exchange gain. Excluding the currency fluctuations, the underlying operating profit was
up 12% year on year.
We continue to invest in marketing and building our distribution platforms in this
segment with much of this investment being ahead of expected future revenue growth.
This segment also includes the results from our start-up Brand-ID business which is
still in an investment phase and we remain at least 12 months away from a breakeven
position within this business.
TEXTILE SEGMENT
Tough trading conditions, particularly in the first half of the financial year, saw
turnover down 4% to R689 million. Operating profit as reflected is up 13% to R32 million
but the current year's operating profit includes impairment reversals of R23 million
due to previous loss-making businesses returning to profitability. Excluding this
impairment reversal, the underlying operating profit is R9 million, a R19 million
reduction from the R28 million recorded in the prior period.
The current year's results were affected by a number of extenuating circumstances most
notably the liquidation of an external steam supplier which cost the Group some
R9 million in increased energy costs. A coal-powered boiler was commissioned in the
last quarter of 2012 and energy costs have returned to normal levels.
The second half of the financial year saw a much stronger performance from this
segment with an operating profit, excluding the impairment reversal, of R16 million
being recorded.
INDUSTRIAL SEGMENT
Revenue in this segment was down 2% to R335 million reflecting the tough trading
environment for the local manufacturing segment. Despite the reduction in turnover,
the improved gross margins realised saw operating profit climb 61% to R17 million.
CLOTHING SEGMENT
Turnover within the segment was down 19% to R695 million. This reduction was
anticipated and was in line with the restructuring completed in the prior financial
year. The reduced capacity allowed us to eliminate lower margin product thereby
raising overall gross margins. In addition, the streamlined overhead structures
resulted in improved efficiencies.
The above actions saw operating losses reduce by R67 million from a prior year loss
of R101 million to a R34 million loss in the current period. Although the improvement
is substantial, we recognise that continued losses in any business is unsustainable.
We are considering a number of strategies to further improve the situation and we
anticipate that the next financial year will remain challenging as these strategies
are implemented.
PROPERTY SEGMENT
Revenue increased 40% to R93 million due to the various phases of the property
development being completed and let. Of significance is that revenue from external
tenants increased by 93% to R47 million and now represents more than 50% of the
total revenue.
Operating profit before finance costs increased by 43% to R64 million, up from
R45 million in the prior period.
The property developments are progressing well. The New Germany Industrial Park has
been completed, it is 157 731 m2 in extent and is 88% let. The Mobeni Industrial Park
is on track to be completed by mid-2013, it is 73 087 m2 in extent and fully let.
R224 million has been spent on the developments to date, with some R25 million
remaining to be spent.
POST BALANCE SHEET EVENT
We have previously disclosed in the SENS announcements of 16 March 2012 and
30 October 2012 that the transfer of the Observatory Property to the company was the
subject of separate litigation. This litigation has been resolved on 6 May 2013 in
the company's favour and we have been advised that the third parties do not enjoy any
further rights of appeal. Accordingly the transfer of the Observatory Property to the
company, with a current estimated market value of R38,7 million, is in the process of
being effected.
APPRECIATION
We would like to take this opportunity to thank all our employees for their concerted
efforts during the past financial year. The improvements reflected in this report are as
a direct result of the commitment shown by our management teams and all the staff that
support them.
On behalf of the board
Stuart Queen Gys Wege
Chief Executive Officer Financial Director
23 May 2013
Registered office: 1 Moorsom Avenue, cnr Bofors Circle and Moorsom Avenue,
Epping Industria II 7460; PO Box 524, Eppindust 7475, South Africa
Directors: J A Copelyn* (Chairman), Adv N N Lazarus* (Lead Independent Director),
M H Ahmed*^, D Duncan, T G Govender*, A M Ntuli, S A Queen (Chief Executive Officer),
Y Shaik*^, R Watson*^, G D T Wege (Financial Director)
(* Non-executive ^ Independent)
Company secretary: HCI Managerial Services Proprietary Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited,
70 Marshall Street, Johannesburg 2001; PO Box 61051, Marshalltown 2107
Auditors: KPMG Inc.
Sponsors: Investec Bank Limited
Date: 23/05/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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