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Unreviewed Condensed Consolidated Results for the six months ended 31 March 2014
CULLINAN HOLDINGS LIMITED
TOURISM AND LEISURE
(Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)
("Cullinan" or "the company" or "the group")
UNREVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2014
GROUP FINANCIAL HIGHLIGHTS
Attributable earnings - up 60,6% to R43,847 million
Headline earnings – up by 60,7% to R43,698 million
Profit before taxation – up by 63,5% to R60,4 million
Cash resources – increased by R21,4 million
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
Unreviewed Unreviewed Audited
six months six months year ended
31 March 31 March 30 September
2014 2013 2013
R'000 R'000 R'000
ASSETS
Non-current assets 284 855 159 945 267 141
Property, plant and equipment 153 508 77 097 140 018
Goodwill 66 858 35 289 66 758
Intangible assets 34 893 28 148 31 041
Investment properties 10 900 7 900 10 900
Investment in associate companies 4 243 3 748 4 243
Investment in joint venture 5 613 4 346 5 341
Deferred tax asset 8 840 3 417 8 840
Current assets 488 863 322 663 502 373
Inventories 36 426 27 185 29 127
Accounts receivable 261 946 133 788 266 109
Other financial asset – – 234
Taxation 7 670 291 964
Cash resources 182 821 161 399 205 939
Total assets 773 718 482 608 769 514
EQUITY AND LIABILITIES
Ordinary shareholders' equity 359 361 209 541 323 373
Preference shareholders' equity 546 546 546
Non-controlling interest 1 502 102 1 804
Total shareholders' equity 361 409 210 189 325 723
Non-current liabilities 14 289 16 497 15 356
Deferred tax liability 5 688 5 601 5 688
Operating lease accrual 8 101 10 396 9 168
Preference shares 500 500 500
Current liabilities 398 020 255 922 428 435
Operating lease accrual 1 937 9 1 467
Accounts payable 371 740 249 727 421 514
Bank overdrafts 251 232 202
Taxation 12 221 2 055 3 801
Preference dividends 16 15 15
Provisions 11 855 3 884 1 436
Total equity and liabilities 773 718 482 608 769 514
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unreviewed Unreviewed Audited
six months six months year ended
31 March 31 March 30 September
2014 2013 2013
R'000 R'000 R'000
Revenue 441 435 284 565 600 553
Turnover 435 895 280 362 592 689
Cost of sales (158 421) (87 061) (171 114)
Gross profit 277 474 193 301 421 575
Net operating expenses (222 892) (160 556) (355 370)
Operating profit 54 582 32 745 66 205
Finance income 5 540 4 203 7 864
Finance expenses – – (192)
Preference dividends paid (26) (27) (55)
Share of (loss)/profit of associates – – 495
Share of profit of joint venture 272 – 995
Profit before taxation 60 368 36 921 75 312
Tax expense (16 972) (9 721) (18 314)
Profit for the period 43 396 27 200 56 998
Other comprehensive income:
Exchange differences on translating
foreign operations 149 94 262
Total comprehensive income
for the period 43 545 27 294 57 260
Profit attributable to:
equity holders 43 698 27 200 56 859
non-controlling interest (302) – 139
Total comprehensive income
attributable to:
equity holders 43 847 27 294 57 121
non-controlling interest (302) – 139
Basic earnings per share (cents) 5,46 3,79 7,85
Diluted earnings per share (cents) 5,39 3,79 7,73
GROUP CONDENSED STATEMENTS OF CHANGES IN EQUITY
Unreviewed Unreviewed Audited
six months six months year ended
31 March 31 March 30 September
2014 2013 2013
R'000 R'000 R'000
Ordinary share capital
Balance at beginning of period 7 927 7 184 7 184
– Issued for business combination 75 – 743
Balance at end of period 8 002 7 184 7 927
Share premium
Balance at beginning of period 140 942 59 905 59 905
– Arising from issue for business
combination 8 144 – 81 037
Balance at end of period 149 086 59 905 140 942
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 (1 665) (1 927) (1 927)
– Reserve on translation of
foreign subsidiary 149 94 262
Balance at end of period (1 516) (1 833) (1 665)
Revaluation reserve
Balance at beginning of period 870 870 870
Balance at end of period 870 870 870
Share-based payment reserve
Balance at beginning of period 2 225 – –
– Expense for the year – – 2 225
Balance at end of period 2 225 – 2 225
Accumulated profit/(loss)
Balance at beginning of period 152 194 102 519 102 519
Attributable income for period 43 698 27 200 56 859
Ordinary dividend paid (16 078) (7 184) (7 184)
Balance at end of period 179 814 122 535 152 194
Ordinary shareholders' equity 359 361 209 541 323 373
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 1 804 102 102
– Arising from business combination – – 1 645
– Profit attributable to non-controlling
interest (302) – 139
– Dividend paid to non-controlling
interest – – (82)
Balance at end of period 1 502 102 1 804
Total comprehensive income
Profit for period 43 396 27 200 56 998
– Attributable to equity shareholders 43 698 27 200 56 859
– Attributable to non-controlling
interest (302) – 139
Translation of foreign subsidiary 149 94 262
43 545 27 294 57 260
GROUP CONDENSED STATEMENT OF CASH FLOWS
Unreviewed Unreviewed Audited
six months six months year ended
31 March 31 March 30 September
2014 2013 2013
R'000 R'000 R'000
Net cash inflow/(outflow) from
operating activities 3 354 6 701 38 751
Net cash outflow from investing
activities (26 521) (33 911) (45 247)
Net cash outflow from financing
activities – – (82)
Net (decrease)/increase in cash
and cash equivalents (23 167) (27 210) (6 578)
Cash acquired on acquisition – – 23 938
Cash and cash equivalents
at beginning of the period 205 737 188 377 188 377
Cash and cash equivalents
at end of the period 182 570 161 167 205 737
NOTES
1. Basis of preparation
The unreviewed condensed consolidated results for the six months ended 31 March
2014 have been prepared in accordance with and contains information required by
International Accounting Standard (IAS) 34: Interim Financial Reporting, as well as the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
the Listings Requirements of the Johannesburg Stock Exchange Limited and the South
African Companies Act, 71 of 2008, as amended. The accounting policies as well as the
methods of computation used in the preparation of the reviewed results for the six months
ended 31 March 2014, are in terms of the International Financial Reporting Standards
(IFRS) and are consistent with those applied in the audited annual financial statements for
the year ended 30 September 2013. The unreviewed results are presented in Rand, which
is Cullinan Holdings Limited's presentation currency.
The unreviewed condensed consolidated interim results for the six months ended
31 March 2014 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 Audited
six months six months year ended
31 March 31 March 30 September
2014 2013 2013
Ordinary shares ('000)
– In issue 800 173 718 355 792 701
– Weighted average 800 173 718 355 724 551
– Diluted weighted average 810 714 718 355 735 092
R'000 R'000 R'000
Determination of headline
earnings:
Earnings attributable to
ordinary shareholders 43 698 27 200 56 859
(Profits)/Losses on disposal
of property, plant and
equipment – – 211
Tax effect – – (59)
Adjustment to fair value of
investment property – – (3 000)
Tax effect – – 622
Headline earnings 43 698 27 200 54 633
Headline earnings
per share (cents) 5,46 3,79 7,54
Diluted headline earnings
per share (cents) 5,39 3,79 7,43
Dividends per share (cents) 2,00 1,00 1,00
Net asset value
per share (cents) 45,17 29,26 44,96
3. JSE Limited ("JSE")
The directors of the company ensured compliance with the JSE Listings Requirements
during the period under review.
4. Business combinations
On 1 October 2013, on fulfilment of the final suspensive condition being the approval by the
Competitions Board of Namibia, the company acquired the assets and business of Springbok
Atlas Namibia (Pty) Limited. This business owns and operates coaches, primarily for tourists.
This was acquired as part of the larger transaction being the acquisition of the tourism
interests of Imperial Holdings Limited. Goodwill of R500 000 arising from the acquisition
consists largely of the synergies expected through owning a coaching company in Namibia,
which will be utilised to service other Cullinan companies requirements.
The acquisition was funded by an issue of ordinary shares.
The carrying value of the assets as noted below are based upon unaudited amounts and
are expected to approximate fair value of assets before the acquisition.
The assets acquired from Springbok Atlas Namibia (Pty) Limited as at 30 September 2013
arising from acquisition are as follows:
Estimated
fair value
R'000
Property, plant and equipment 7 719
Purchase consideration (7 471 976 shares at R1,10 per share) 8 219
Goodwill 500
The property, plant and equipment consists of coaches of varying sizes. No trade receivables
were acquired from the acquisition.
Since the acquisition date, the following amounts have been included in the statement of
comprehensive income for the period:
R'000
Revenue 8 996
Operating loss (1 059)
5. Segmental reporting
Travel Marine
and and Financial Corporate
Tourism Boating Services Services Total
R'000 R'000 R'000 R'000 R'000
31 March 2014
Revenue 386 322 24 681 28 496 1 936 441 435
Operating profit 66 495 504 910 (13 327) 54 582
31 March 2013
Revenue 237 077 22 544 23 023 1 921 284 565
Operating profit 41 195 (148) 1 487 (9 789) 32 745
30 September 2013
Revenue 494 389 46 011 59 114 1 039 600 553
Operating profit 91 975 1 002 5 725 (32 497) 66 205
Segmental reporting is aligned with the information that the chief operating decision maker
reviews in order to make decisions about the allocation of resources across the business.
GROUP OVERVIEW
We are pleased to report an excellent group performance for the six months ended
31 March 2014 with headline earnings increasing by 60,7%. This follows strong
annual growth in headline earnings of 56% for the full year to September 2013 and
65% for the September 2012 year.
All divisions have performed well during the past six months and the fundamentals
of our business continue to look positive for the balance of the year. The investment
in the travel services division post the 2010 world cup (new depots, new offices,
a state of the art travel reservation systems, significant capital expenditure in
coaches and fleet, as well the acquisition of travel related companies) has
significantly increased the scale of the travel services within the group. As a result
the group is well placed to benefit from the upturn in tourism into South Africa
being experienced in 2014. It is also pleasing to see that the outbound travel
business is also performing well.
Overall, we have achieved our goal for the period of continued growth whilst bedding
down the various businesses acquired from Imperial Holdings in September and
October 2013.
The 55% growth in revenue in the period was realised through a combination of
strong growth in the historic tourism and travel interests and the inclusion of sales
for the newly acquired businesses referred to above. Likewise, net operating costs
have been effectively managed with the increase in these costs primarily due to
these same acquisitions.
The balance sheet shows a significant increase in both current assets and current
liabilities when compared against the same period last year, again, a reflection of
the increased revenue as explained above. Cash from operations remains positive,
if slightly lower than for the comparative period, primarily due to the doubling of
dividend paid. While cash on hand increased by R21,4 million when compared
to March 2013, the comparison against cash on hand at 30 September 2013
showed a decline. This as a result of a combination of the normal seasonality of
the business and a greater mix of credit customers assumed in the acquisitions
commented on previously.
SUMMARY OF KEY ACHIEVEMENTS OVER THE SIX-MONTH PERIOD:
- All divisions performed well during the period;
- The acquisition of Peak Incentives, a company specialising in meetings and
incentives, was completed in the period;
- The establishment of African Diamond Tours, a niche operator focused on
inbound tourism to South Africa from Turkey. This parnership is performing well
and benefiting from the scale of the Cullinan Group;
- Key changes were made to the operations of the companies acquired from
Imperial Holdings to bring them in line with operational disciplines within
Cullinan Holdings. These changes have seen a significant improvement in the
performance of the companies acquired and it is anticipated that operational
improvements to be implemented over the following 12 months, including
the continued upgrade of their coach fleet, will see further progress made in
improving the quality and results of these businesses;
- State of the art technology systems have been successfully implemented
throughout the group and are in the process of being fine tuned. It is expected
that these technology upgrades will produce significant benefits to efficiencies
and service levels over the next 12 months in both the inbound and outbound
travel businesses;
- The Thompsons Africa – China Inbound Division has continued to grow during
the period, benefiting from the overall unique scale of the group's travel services
infrastructure; and
- The Cullinan Financial Services Division appointed a new Chief Executive Officer
in the period. Michael Barr, the Regional Head of Investec in the Cape from
1998 to 2008, joined Cullinan in March 2014. His appointment is expected to
drive growth in this division, both organically and through acquisition during the
balance of the 2014 year.
REVIEW OF OPERATIONS
Marine and Boating
The Marine and Boating segment improved markedly over the same period last
year although results are still modest. The weaker Rand has already resulted in
an upturn in boatbuilding so the segment should be well placed for the remainder
of the year.
Tourism and Travel
Retail Travel grew significantly in 2013 and despite starting off this high base; it
is pleasing that this segment continues to show healthy growth in revenue and
profit. The effect of the weaker Rand would normally have a dampening effect on
retail and outbound travel, but the effect so far has been muted. As mentioned
previously, the inbound businesses have benefited from the upturn in international
visitors while Coach Utilisation has been very strong. Altogether we are pleased
with the results generated from the Tourism, Travel and Coach Charter businesses.
Cullinan Financial Services
Growth in the Financial Services segment has been slower than hoped for.
However, effective March 2014, we have appointed a new Chief Executive for
Cullinan Financial Services and we expect to see an improvement in this business.
In addition, we are currently investigating a number of acquisition opportunities
in this segment and we are confident that we will see the results in due course.
PROSPECTS FOR THE BALANCE OF 2014
We are confident about the future long-term growth prospects for the group and
the ability to leverage its unique scale of operation within the tourism industry in
Southern Africa. The anticipated growth in the tourism market to Southern Africa,
both from Asia and other traditional markets is looking very strong and to some
extent positively impacted by a weaker Rand and disruptions in other parts of
the world, such as Egypt. The fundamentals of our core businesses are strong
and the new acquisitions in the tourism and travel segments are well placed to
take advantage of this upward trend. Outbound Travel remains solid, and with
the diversification into Financial Services, we believe the group is well placed for
continued growth.
On behalf of the board
M Tollman D Standage
Chief Executive Officer Financial Director
8 May 2014
Directors:
M Tollman
MA Ness*‡
DD Hosking*-
LA Pampallis
G Tollman*‡
DK Standage
R Arendse‡
S Nhlumayo‡
A Azoulay‡
*Non-resident
-Non-executive
‡Independent non-executive
Company secretary:
B Allison
Registered office:
6 Hood Avenue, Rosebank, 2196
Auditors:
Mazars Inc were re-elected as auditors in 2014.
Sponsor:
Arcay Moela Sponsors Proprietary Limited
(Registration number 2006/033725/07)
Transfer secretaries:
Computershare Investor Services Proprietary 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
(Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)
("Cullinan" or "the company" or "the group")
Date: 08/05/2014 04:47:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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