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Audited Group Results For The Year Ended 31 August 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")
Audited Group results for the year ended 31 August 2013
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
Group to Group to
31 August 2013 31 August 2012
R'000 R'000
Assets
Non-current assets 726 285 673 555
Property, plant and equipment 126 890 135 500
Goodwill 37 325 34 191
Intangibles 12 783 15 642
Investments in joint ventures - -
Investment in associate 112 382 120 956
Loans receivable 38 763 25 322
Operating lease asset - 2 274
Other financial assets 380 644 314 451
Deferred tax 17 498 25 219
Current assets 174 818 181 748
Inventory 17 765 17 851
Biological assets 41 798 38 537
Other loans receivable 2 275 1 464
Current tax receivable 174 209
Trade and other receivables 70 497 77 434
Cash and cash equivalents 42 309 46 253
Assets of disposal groups and non-current assets
held for sale 2 127 -
Total assets 903 230 855 303
Equity and liabilities
Capital and reserves
Share capital and share premium 403 177 403 177
Reserves 121 194 121 194
Accumulated losses (52 137) (81 548)
Equity attributable to parent 472 234 442 823
Non-controlling interests 4 762 9 041
Total equity 476 996 451 864
Non-current liabilities 282 594 253 872
Other financial liabilities 149 239 129 949
Deferred tax 132 721 123 189
Other non-current liabilities 634 734
Current liabilities 143 640 149 567
Trade and other payables 77 848 85 806
Other financial liabilities 38 864 37 784
Other current liabilities 336 51
Provisions 21 369 16 766
Bank overdraft 1 214 6 567
Current tax payable 4 009 2 593
Total equity and liabilities 903 230 855 303
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Group to Group to
31 August 2013 31 August 2012
R'000 R'000
Revenue 569 198 455 860
Cost of sales (390 711) (305 131)
Gross profit 178 487 150 729
Other income 3 949 3 700
Other expenses (148 600) (123 882)
Impairments (32 913) (1 370)
Fair valuation adjustments 66 193 30 081
Investment revenue 19 935 17 334
Loss from associate (8 039) (9 211)
Finance cost (20 347) (19 251)
Profit before tax 58 665 48 130
Tax (28 313) (29 931)
Profit for the year after tax 30 352 18 199
Other comprehensive income - -
Total comprehensive income 30 352 18 199
Attributable to:
Non-controlling interests 618 246
Equity holders of the parent 29 734 17 953
30 352 18 199
Number of shares in issue 489 339 489 339
Weighted number of shares in issue 489 339 489 339
Diluted number of shares in issue 489 339 489 339
Earnings and diluted earnings per share (cents) 6,08 3,67
Net asset value per share (cents) 96,50 90,49
Tangible net asset value per share (cents) 86,26 80,31
CONDENSED STATEMENT OF CHANGES IN EQUITY
Attributable Non-
to controlling Total
parent interests equity
R'000 R'000 R'000
Balance at 1 September 2011 424 870 10 195 435 065
Net profit for the year 17 953 246 18 199
Dividends declared to NCI by subsidiaries - (1 400) (1 400)
Balance at 31 August 2012 442 823 9 041 451 864
Net profit for the year 29 734 618 30 352
Dividends declared to NCI by subsidiaries - (2 218) (2 218)
Change in ownership interest - control
not lost (323) (2 580) (2 903)
Business combination (99) (99)
Balance at 31 August 2013 472 234 4 762 476 996
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
Group to Group to
31 August 2013 31 August 2012
R'000 R'000
Cash flow from operating activities 42 959 53 302
Cash flows from investing activities (13 487) (96 437)
Cash flows from financing activities (28 063) 90 408
Increase in cash and cash equivalents 1 409 47 273
Cash and cash equivalents at beginning of the year (39 686) (7 587)
Cash equivalents at the end of the year 41 095 39 686
CONDENSED GROUP SEGMENTAL REPORT 2013
Technology Health-
Solutions Fishing care
R'000 R'000 R'000
Revenue 193 031 272 729 16 918
External sales 192 906 272 464 16 382
Inter group sales 125 265 536
Segment result
Operating profit/(loss) 35 225 24 613 (9 219)
Included in segment results: (1 182) (18 217) (2 007)
Impairments (100) (1 612) -
Depreciation and amortisation (1 082) (16 605) (2 007)
Fair valuation of investments - - -
Carrying amount of assets 74 904 233 829 34 784
Carrying amount of liabilities 45 935 105 169 6 896
Capital expenditure 465 9 841 713
Biotechnology Investments Media Group
R'000 R'000 R'000 R'000
Revenue - 24 017 88 888 595 583
External sales - 1 110 86 336 569 198
Inter group sales - 22 907 2 552 26 385
Segment result
Operating profit/(loss) (30 494) 54 427 (7 436) 67 116
Included in segment results: (30 427) 65 078 (80) 13 165
Impairments (30 427) (779) - (32 918)
Depreciation and amortisation - (160) (256) (20 110)
Fair valuation of investments - 66 017 176 66 193
Carrying amount of assets 150 708 391 408 17 597 903 230
Carrying amount of liabilities 24 972 219 305 23 957 426 234
Loss from associate (8 039) - - (8 039)
Capital expenditure - 864 99 11 982
CONDENSED GROUP SEGMENTAL REPORT 2012
Technology Fishing Health-
Solutions care
R'000 R'000 R'000
Revenue 152 436 208 018 16 994
External sales 152 214 207 639 16 994
Inter group sales 222 379 -
Segment result
Operating profit/(loss) 38 459 16 028 (7 828)
Included in segment results: (4 790) (17 465) (2 018)
Impairments (275) - -
Depreciation and amortisation (4 515) (17 465) (2 018)
Fair valuation of investments - - -
Carrying amount of assets 82 994 255 946 16 677
Carrying amount of liabilities 42 696 97 898 8 341
Capital expenditure 750 10 831 19
Biotechnology Investments Media Group
R'000 R'000 R'000 R'000
Revenue - 21 952 77 820 477 220
External sales - 1 999 77 014 455 860
Inter group sales - 19 953 806 21 360
Segment result
Operating profit/(loss) (42) 19 738 (7 097) 59 258
Included in segment results: - 28 914 (271) 4 370
Impairments - (1 095) - (1 370)
Depreciation and amortisation - (58) (285) (24 341)
Fair valuation of investments - 30 067 14 30 081
Carrying amount of assets 174 779 330 146 17 838 878 380
Carrying amount of liabilities 24 951 242 468 16 528 432 882
Loss from associate (9 211) - - (9 211)
Capital expenditure - 244 432 12 276
RECONCILIATION BETWEEN OPERATING PROFIT AND PROFIT BEFORE TAX
Audited Audited
Group to Group to
31 August 2013 31 August 2012
R'000 R'000
Operating profit 67 116 59 258
Investment revenue 19 935 17 334
Finance costs (20 347) (19 251)
Loss from equity accounted investments (8 039) (9 211)
Profit before tax 58 665 48 130
Audited Audited
Group to Group to
Calculation of Headline Earnings 31 August 2013 31 August 2012
R'000 R'000
Earning attributable to ordinary equity
holders of parent entity - IAS 33 29 734 17 953
Adjusted for:
Impairments of intangible assets - IAS 38 - 275
Gains on disposal of property, plant and
equipment - IAS 36 95 122
Headline earnings 29 829 18 350
Headline earnings and diluted headline earnings
per share (cents) 6.10 3.75
Business combination
On 1 June 2013 Sekunjalo Technology Solutions Group (Pty) Ltd acquired 75% of the voting
equity interest of World Wide Creative (Pty) Ltd ("WWC") which resulted in the group
obtaining control over WWC. WWC is principally involved in the digital marketing agency
sector in the technology industry.
Audited
Group to
31 August 2013
R'000
Property, plant and equipment 135
Loans to directors, managers and employees (564)
Current tax receivable (14)
Trade and other receivables 1 951
Trade and other payables (1 893)
Deferred tax 143
Cash and cash equivalents 635
Non-controlling interest (99)
Goodwill 3 134
Additional financial information
Included in the profit is fair value adjustments to the Groups investments of R66m.
Refer to the segmental report for fair valuations within each division.
Certain loans to Bioclones have been impaired after the impairment test performed in
terms of IAS 39 indicated that a portion of the loan may not be recovered.
Highlights
Revenue increased by 25% from R455m to R569m.
Headline earnings increased by 63% from R18m to R30m.
NAV per share increased by 7% from 90,49c to 96,50c
Group performance
The Group revenue has increased by 25% to R569m (2012:R455m), thereby breaking the half
a billion mark which reflects the underlying operational organic growth of the
operations.
The profit attributable to the Group equity holders is R29m (2012: R18m). The headline
earnings has increased from R18m to R30m in 2013 with headline earnings per share
("HEPS") increasing from 3.75c to 6.10c. This is mainly due to the increase in the
value of the strategic investments and operational performance. Prior year headline
earnings were impacted by the change in the capital gains tax rate.
The operating profit has increased from R59m to R67m which demonstrates that
consistent returns were achieved from the underlying investments.
The Group net asset value (NAV") increased by approximately 5,5% from R452m to R477m
which shows the strength of the Groups financial position. The NAV per share increased
from 90,49c to 96,50c. Tangible net asset value per share increased from 80,31c to
86,26c. Sekunjalos strategic intent to increase its investment asset base has been
achieved.
The group has incurred capital expenditure of R11,8m in the current year under review,
mainly from the fishing division with maintenance and replacement cost of R9m on the
vessel fleet.
As a result of the dividend cash flows decreasing from R18m to R11m in comparison to
prior year, the net cash flows from operating activities have decreased from R53m to
R42m.
The fishing division performed well as a result of additional sales volumes from the
lobster division, better market pricing and favourable exchange rates.
Profit growth for the fishing division was excellent compared to the prior year, with
operating profit increasing by 50% to R24m.
The Sekunjalo Technology Solutions Group division earnings declined from R38m to R35m
due to the expected lower margins after the successful implementation of projects.
Strategic investments
The Groups strategic investments consist of British Telecom Communication Services
South Africa (BTSA"), Saab South Africa (Pty) Ltd (Saab SA") and Pioneer Food
Group Ltd.
The investment in BTSA continues to perform well with budgeted expectations exceeded in
the current year. The investment looks extremely well positioned to grow consistently
over the next few years. The investment delivered another consistent dividend during
the year under review.
Saab SA is the South African operations of Swedish multi-national Saab AB, which
specializes in civil security and defense. The Group expects this investment to return
a dividend in the medium term.
Our investment in the Pioneer Foods Group grew from R84m to R125m for our 0,75%
stake. Dividends were received in the current year by the listed investment, which
indicates consistent returns.
Information Communication Technology
The expected growth of Sekunjalo Technology Solutions Group division (Sek TSG") is
shown in the revenue growth of 27%, an increase from R152m to R192m. The operating
profit to the Group is R35m which shows that the technology solution division continues
to perform consistently.
Companies in the Sek TSG division include Saratoga Software (Pty) Ltd (Saratoga")
which is a software development house primarily focused on the insurance industry and
Digital Matter (Pty) Ltd (Digital Matter"), a 75% Saratoga owned subsidiary providing
mobile data solutions. In the current year, the Saratoga Group acquired World Wide
Creative (Pty) Ltd, a digital marketing agency to expand its operations into a new
sector.
Health System Technologies (HST") is a leading provider of Hospital Information and
Laboratory Information Systems for the South African public sector and continues to
show excellent results with revenue increasing by 12% due to the successful
implementation of its IT contracts and projects over the past three years.
HST partnered with AME International through AmetHst (Pty) Ltd (AmetHst"), which won
the Gauteng Department of Healths HIS contract which entails implementing systems in
over 60 Gauteng hospitals and clinics.
As previously reported, the contract entered into between AmetHst as part of the Baoki
Consortium and the Gauteng Department of Health for the implementation of the hospital
information systems(HIS") has been cancelled by the Baoki Consortium. This action was
taken as a result of a non-delivery by the Gauteng Department of Health on their
contractual obligations. The arbitration for this legal claim is ongoing.
Laboratory System Technology ("LST"), a former supplier to HST, had made a claim against
the company that it had infringed LST's copyright by copying the LST code, to produce
web based software. HST pursued negotiations on the basis of LST's original claim and
the matter was settled out of court on 27 May 2013 by both parties.
Marine
Premier Fishing SA (Pty) Ltd (Premier Fishing") is the largest black owned and
controlled fishing company in South Africa and the most transformed in terms of its
management and employees.
The major product lines for Premier Fishing are south coast rock lobster, west coast
rock lobster, squid, abalone and pelagic.
Premier Fishing performed well with good catch rates in the lobster sector and obtained
favourable market pricing.
Operating profit of R24m (2012:R16m) was achieved for this division, a 50% increase
from the prior year. The above mentioned factors along with the effects of the weakened
rand were the major reasons for the good performance.
The south coast rock lobsters division revenue was affected by 16% of the quota which
was not caught at year end due to poor weather conditions. The balance of the 2013 quota
was caught in the first quarter of 2014. Good catch mix enabled a good performance from
this division.
The west coast rock lobster division performed considerably well taking into account the
extra sale volumes achieved in the current year.
The pelagic sector did not fare well in the 2013 season due to poor catch rates of
anchovy fish. This division landed most of their pilchard quota and only a portion of
their anchovy quota.
The squid industry faced another tough year in terms of landing volumes, however,
management achieved a small profit in this division.
Marine Growers (Pty) Ltd, a subsidiary of Premier Fishing, delivered good revenues with
additional volumes sold to the Far East. The abalone farm continues to perform well
despite the tough economic climate.
Premier Fishing received a summons from the Competition Commission pursuant to the
Commission's investigation into the pelagic fishing industry which has been ongoing
since July 2008. Premier Fishing's attorneys have undertaken an extensive investigation
to settle the matter. The settlement terms are currently being negotiated. A provision
for the expected penalty has been accounted for.
Healthcare
The pharmaceutical operation in Health Care has produced an operational loss of R8m due
to revenues generated being below expectations.
The product offerings in the natural disinfectant and sanitiser sector is growing well
and good traction is being achieved in this operation.
Biotechnology
Genius Biotherapeutics ("Genius"), formerly known as Bioclones (Pty) Ltd, is South Africa
and Africas largest medical biotechnology company with strategic interests in
biogenerics and novel compounds.
Genius also holds global patents for personalised medicine and vaccines. Genius
Biotherapeutics novel technology is in advanced stages with the next stage of
development proceeding well towards pre-clinical trials. The company has partnered with
the University of Cape Town ("UCT") Department of Medicine, UCT Lung Institute and
Pulmonology and Immunity unit to develop the therapeutic vaccine against cancer.
Management continues with its plans to upgrade the manufacturing facility to prepare for
improved production to increase efficiency at the facility in Centurion.
During the year, the scientific team at the Cape Town facility continued with their
efforts to replicate the protocol for the granulocyte-colony stimulating factor (G-CSF)
technology.
Media
The Sekunjalo Media ("Sekmedia") division incurred a loss due to the cancellation and
postponement of certain new events. Sekmedia owns the rights of and manages the
Cape Town International Jazz Festival. The Cape Town International Jazz Festival
continues to bear fruit and contributes greatly to the gross domestic product of the
Western Cape and national economy.
Basis of preparation
The condensed consolidated financial information has been prepared in accordance with
IAS 34 - Interim financial reporting and is based on the audited financial statements
of the Group for the year ended 31 August 2013, which have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), the SAICA financial reporting
guides issued by the Accounting Practices Committee, the Listings Requirements of the
JSE Limited, and the current Companies Act of South Africa. The condensed financial
statements have been audited by the Groups independent auditors, PKF (Cpt) Inc., whose
report is available for inspection at the registered office of the Company.
The audited financial results for the year ended 31 August 2013 have been prepared in
accordance with the Group accounting policies and are consistent with those applied in
the previous financial year. The annual financial statements were prepared by Natasha
September, Financial Controller, BCom (Hons), CA(SA).
Events after the reporting date
The directors are not aware of any events post reporting date that materially affects
the Group.
Future prospects
The core operational investments in our technology and fishing sectors have shown
excellent growth during the current year in line with our strategy. The Group has built
a strong platform for further growth over the next few years.
As we have built on our financial successes over the past few years, we believe that
Sekunjalo is well positioned to further enhance its earnings and is well set to
bolster its net asset value growth through organic growth, acquisitions and strategic
initiatives.
Any reference to future financial performance included in this announcement has not been
reviewed or reported on by the Group's auditors.
Dividends
No dividends have been declared for the current period. The Board continues to work
towards payment of dividends in the foreseeable future and believes that the Group
strategy will deliver significant returns on investments.
Appreciation
We would like to thank the Sekunjalo board of Directors for their continued wise
stewardship, the strategic guidance and commitment in ensuring the continued success of
the Sekunjalo Group.
In addition, we would also like to express our sincere gratitude and appreciation to all
our executives, our team of highly talented employees and strategic partners for their
passion, loyalty and dedication for their efforts and who continue to contribute to the
success of Sekunjalo.
Furthermore, I would like to welcome our two non-executive directors, Mrs Aziza Amod
who joined the board on 14 November 2012 and Mr Takudzwa Hove who joined the board on
5 September 2013.
MI Surve K Abdulla
Executive chairman Chief executive officer
5 November 2013
Directors
*Dr M Iqbal Surve (Executive Chairman); *Khalid Abdulla; Prof Vukile Mehana,
Johannes Mihe Gaomab; Salim Young; *Cherie Felicity Hendricks; *Chantelle Ah Sing;
Aziza Amod and Takudzwa Hove
*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,
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein, 2001
Auditors: PKF (Cpt) Inc, Cape Town
Sponsor: PSG Capital (Pty) Ltd, Stellenbosch
Date: 05/11/2013 10:49:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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