Wrap Text
Audited Condensed Group results for the year ended 31 August 2014
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 Condensed Group results for the year ended 31 August 2014
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
Group to Group to
31 August 31 August
2014 2013
R'000 R'000
Assets
Non-current assets 971 241 726 285
Property, plant and equipment 138 266 126 890
Goodwill 55 469 37 325
Intangible assets 336 367 12 783
Investment in associate - 112 382
Loans receivable 2 065 38 763
Other financial assets 427 173 380 644
Deferred tax 11 901 17 498
Current assets 204 991 174 818
Inventory 22 305 17 765
Biological assets 36 014 41 798
Other loans receivable 245 2 275
Current tax receivable 556 174
Trade and other receivables 98 753 70 497
Cash and cash equivalents 47 118 42 309
Assets of disposal groups and non-current
assets held for sale 1 852 2 127
Total assets 1 178 084 903 230
Equity and liabilities
Capital and reserves
Share capital and share premium 403 177 403 177
Reserves 8 034 121 194
Retained income/(Accumulated losses) 157 825 (52 137)
Equity attributable to parent 569 036 472 234
Non-controlling interests 96 036 4 762
Total equity 665 072 476 996
Non-current liabilities 347 935 282 594
Other financial liabilities 135 445 149 239
Deferred tax 210 489 132 721
Other non-current liabilities 2 001 634
Current liabilities 165 077 143 640
Trade and other payables 98 873 77 848
Other financial liabilities 27 933 38 864
Other current liabilities 297 336
Provisions 26 507 21 369
Bank overdraft 4 752 1 214
Current tax payable 6 715 4 009
Total equity and liabilities 1 178 084 903 230
Net asset value (NAV) per share (cents) 115.81 96.50
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Group Group
31 August 31 August
2014 2013
R'000 R'000
Revenue 620 549 569 198
Cost of sales (426 222) (390 711)
Gross Profit 194 327 178 487
Other income 4 710 3 949
Other expenses (145 590) (148 600)
Impairments (1 172) (32 913)
Fair valuation adjustments 46 303 66 193
Gain on deemed disposal of associate 22 556 -
Investment revenue 12 401 19 935
Loss from associate (6 179) (8 039)
Finance cost (19 164) (20 347)
Profit before tax 108 192 58 665
Tax (5 759) (28 313)
Profit for the year 102 433 30 352
Other comprehensive income - -
Total comprehensive income 102 433 30 352
Attributable to:
Non-controlling interests (NCI) 5 631 618
Equity holders of the parent 96 802 29 734
102 433 30 352
Earnings and diluted earnings per share (cents) 19.76 6.08
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Attributable Non-con-
to trolling Total
parent interests equity
R'000 R'000 R'000
Balance at 1 September 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)
Changes in ownership (323) (2 580) (2 903)
Business combinations - (99) (99)
Balance at 31 August 2013 472 234 4 762 476 996
Net profit for the year 96 802 5 631 102 433
Dividends declared to NCI by subsidiaries - (1 148) (1 148)
Business combinations - 86 791 86 791
Balance at 31 August 2014 569 036 96 036 665 072
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
Group Group
31 August 31 August
2014 2013
R'000 R'000
Cash flow from operating activities 57 028 42 959
Cash flows from investing activities (30 118) (13 487)
Cash flows from financing activities (25 639) (28 063)
Increase in cash and cash equivalents 1 271 1 409
Cash and cash equivalents at beginning of the year 41 095 39 686
Cash equivalents at the end of the year 42 366 41 095
CONDENSED GROUP SEGMENTAL REPORT 2014
Technology Marine Health
Care
R'000 R'000 R'000
Revenue 184 991 315 119 22 986
External sales 184 927 314 938 22 392
Intergroup sales 64 181 594
Segment results
Operating profit/(loss) 19 711 51 234 (6 471)
Included in segment results: (899) (15 494) (2 202)
Impairments 109 - (436)
Depreciation and amortisation (1 008) (15 494) (1 766)
Carrying amount of assets 92 911 248 286 29 091
Carrying amount of liabilities 56 652 119 176 9 223
Capital expenditure 1 703 15 985 -
Bio- Enterprise
technology Investments Development Group
R'000 R'000 R'000 R'000
Revenue - 19 141 99 185 641 422
External sales - 651 97 641 620 549
Intergroup sales - 18 490 1 544 20 873
Segment results
Operating profit/(loss) (3 298) 30 568 6 834 98 578
Included in segment results: (821) 45 250 (253) 25 581
Impairments - (845) - (1 172)
Depreciation and amortisation (821) (214) (247) (19 550)
Fair valuation of investments - 46 309 (6) 46 303
Carrying amount of assets 354 164 432 937 20 695 1 178 084
Carrying amount of
liabilities 90 141 218 646 19 174 513 012
Loss from associate (6 179) - - (6 179)
Capital expenditure 9 517 68 18 282
CONDENSED GROUP SEGMENTAL REPORT 2013
Technology Marine Health
Care
R'000 R'000 R'000
Revenue 193 031 272 729 16 918
External sales 192 906 272 464 16 382
Intergroup sales 125 265 536
Segment results
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)
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
Bio- Enterprise
technology Investments Development Group
R'000 R'000 R'000 R'000
Revenue - 24 017 88 888 595 583
External sales - 1 110 86 336 569 198
Intergroup sales - 22 907 2 552 26 385
Segment results
Operating (loss)/profit (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
Reconciliation between operating profit and profit before tax
Audited Audited
Group Group
31 August 31 August
2014 2013
R'000 R'000
Operating profit 98 578 67 116
Investment revenue 12 401 19 935
Finance cost (19 164) (20 347)
Gain on deemed disposal of associate 22 556 -
Loss from equity accounted investments (6 179) (8 039)
Profit before tax 108 192 58 665
Audited Audited
Group Group
31 August 31 August
Calculation of headline earnings 2014 2013
R'000 R'000
Earnings attributable to ordinary equity
holders of parent entity - IAS 33 96 802 29 734
Adjusted for:
Gain on deemed disposal of associate
- IFRS 3 (18 350) -
Losses on disposal of property,
plant and equipment - IAS 36 100 95
Headline earnings 78 552 29 829
Number of shares in issue 491 339 489 339
Weighted number of shares in issue 489 887 489 339
Diluted number of shares in issue 489 887 489 339
Headline earnings and diluted headline
earnings per share (cents) 16.03 6.10
Business combination
African Biotechnological and Medical Innovations Investments Group holds 49.99% in Genius Biotherapeutics ("Genius").
Genius was accounted for as an associate in the prior year. As a result of change in control, Genius is now accounted
for as a subsidiary from June 2014.
In March 2014, Sekunjalo Technology Solutions Ltd (formerly Sekunjalo Health Care Ltd) through its subsidiary Saratoga,
acquired 75% of the voting rights of Afrozaar Consulting cc ("Afrozaar") which resulted in the Group obtaining control
over Afrozaar. The acquisition of Afrozaar is immaterial to the Group.
Audited Audited
Group Group
31 August 31 August
2014 2013
R'000 R'000
Property plant and equipment 11 557 135
Intangible assets 325 860 -
Deferred tax (89 367) 146
Prepayments 614 -
Loans to directors, managers and employees (676) (564)
Loans to members 11 -
Inventories 889 -
Current tax receivable 135 (14)
Trade and other receivables 395 1 951
Cash and cash equivalents 465 635
Trade and other payables (1 974) (1 893)
Loans from group companies (49 566) -
Non-controlling interest (86 775) (99)
Goodwill 18 074 3 134
Highlights
- Revenue increased by 9% from R569m to R621m.
- Operating profit increased by 47% from R67m to R99m
- Total assets increased by 30% from R903m to R1 178m.
- Headline earnings increased by 163% from R30m to R79m.
- NAV per share increased by 20% from 96.50c to 115.81c
- Net cash generated from operating activities increased by 33% from R43m to R57m.
Additional financial information
Included in the Group results, is the effect of the change in control over the Group’s Biotech investment.
This investment was previously accounted for as an associate due to certain shareholder restrictions and it was
equity accounted. The other major shareholder agrees that the Group has the power to direct and control the
relevant activities of Genius Biotherapeutics with effect from June 2014. As a result the Group has met the
definition of control of Genius Biotherapeutics in terms of IFRS 10 and it has been accounted for as a subsidiary.
The total once-off financial impact resulting from the change in control is summarised as follows:
- A gain on deemed disposal of R22,5m (R18.3m net of tax) was recognised in the Group's earnings and arose on the
deemed disposal of the investment in the associate (in terms of IFRS 3);
- The effect of the gain on deemed disposal has a once-off impact on earnings;
- The Group's NAV increased by R76m as a result of consolidating the subsidiary and the application of IFRS 3 in
terms of which the Group recognised assets, liabilities and post-acquisition earnings;
- This transaction significantly affected the Group's deferred tax with the effect of R25m being credited to earnings;
The deferred tax balance related to fair value adjustments of previous years;
- The revaluation reserve of R113m previously recognised was transferred to retained income.
Group performance
The Group revenue increased by 9% from R569m (2013) to R621m (2014), thereby reaching the next growth milestone level
of R600m revenue. This milestone reflects the further organic growth experienced in our underlying operations.
Profit before tax increased by 84% from R59m to R108m, with operating profit increasing to R99m from R67m (2013).
The profit attributable to the Group equity holders increased from R30m (2013) to R97m. Basic earnings per share
increased from 6.08c to 19.76c. Headline earnings increased from R30m to R79m, with headline earnings per share ("HEPS")
increasing from 6.10c to 16.03c.
The Group's NAV has increased by approximately 20% from R472m to R569m, which shows the consistent growth and strength
of the Group's financial position. The NAV per share increased from 96.50c to 115.81c.
Sekunjalo's strategic intent to increase its asset base has been achieved, with the Group's total assets increasing to
over the billion rand benchmark to R1 178m.
Net cash generated from operating activities increased from R43m (2013) to R57m (2014), mainly as a result of organic
growth in the underlying operations. The majority of the underlying operations contributed positively to this result.
The once-off financial effect of the change in control of Genius Biotherapeutics must be considered when reviewing
the results. The detail has been provided in the additional financial information paragraph above.
Strategic investments
The Group's 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 British Telecoms had been financed via a preference share and this was fully settled and paid for
during the current year under review by utilising dividend income generated by the investment. The dividend returns
from this investment is expected to continue in the foreseeable future.
Saab SA is the South African operations of Swedish multi-national Saab AB, which specialises in civil security
and defence. The Group expects this investment to return a dividend in the medium to long term.
Our investment in the JSE-listed Pioneer Foods Group increased from R126m to R189m for our 0,75% stake. Dividends
of R2,4m were received in the current year.
Information Communication Technology
The Sekunjalo Technology Solutions Group ("Sekunjalo TSL") has shown an expected marginal decline in revenue of 5%
from R193m to R185m due to the completion and implementation of certain laboratory systems projects during the
past 18 months and of which the projects have now moved to annuity maintenance income.
Sekunjalo TSL achieved a solid operating profit of R19.6m.
The subsidiary companies of Sekunjalo TSL include Saratoga Software (Pty) Ltd ("Saratoga"), which is a software
development house primarily focused on the financial industry, and Digital Matter (Pty) Ltd ("Digital Matter"), a
75% Saratoga-owned subsidiary providing mobile data solutions. In the prior year Saratoga acquired World Wide
Creative (Pty) Ltd ("World Wide Creative"), a digital marketing agency, to expand its operations into a new sector.
During the current year, Saratoga also acquired 75% of Afrozaar, which focuses on digital media, and content
redistribution.
Health System Technologies ("HST") is a leading provider of Hospital Information and Laboratory Information Systems
for the South African and African public sector and continues to show sustainable and profitable results with ongoing
maintenance annuity income from its IT contracts and projects over the past few years.
HST has partnered with AME International through AmetHst (Pty) Ltd ("AmetHst"), which had won previously the Gauteng
Department of Health's hospital information systems ("HIS") contract, which entailed the implementation of HIS systems
in over 60 Gauteng hospitals and clinics.
However, 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 HIS has been cancelled by the Baoki Consortium.
We wish to notify shareholders that our legal claim against the department has been withdrawn due to complex
investigations into the matter. The counter claim by the department against Baoki still exists, however we have
confirmed via our legal advisors that any liability that may exist is contained with AmetHst (Pty) Ltd only.
We have furthermore ascertained that there is no risk of any claims against either the directors of the company,
its shareholders or the Group in any way.
The operating profit contains non-recurring provisions and costs relating to warranty settlement payments for both
World Wide Creative and Afrozaar as well as a non-recurring guarantee payment for settling the AmetHst overdraft
which has been recorded during the current year.
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 had a bumper year with excellent sales volumes and market prices in the lobster, pelagic and abalone
sectors. This is reflected in the Marine division increasing its turnover by 16% from R272m (2013) to R315m.
Operating profit increased by 112% from R24m (2013) to R51m. This good performance was achieved due to improved
operational efficiencies.
The Marine division experienced exceptional catch rates through effective planning, and vessel scheduling and
utilisation also contributed to the excellent performance.
The south coast rock lobster division performed considerably well taking into account extra sales volumes and
good catch rates. The west coast rock lobster division, however, experienced a decline in revenue. This resulted
from industry-wide lower catch rates and sales volumes but was counteracted through better market prices and
collaboration with fishing communities as well as the effects of the fluctuation of the rand,
The pelagic sector fared well in the 2014 season by achieving good catch rates. This division landed the majority
of its pilchard quota and a significant portion of its anchovy quota.
As an industry, the squid sector did not fare well during the 2014 fishing season due to poor catch rates. This
division experienced a small loss which has been contained. This is, however, not a material part of our
Marine division.
Marine Growers (Pty) Ltd, a subsidiary of Premier Fishing, sold additional volumes of abalone to the Far East,
hence achieving greater revenues. The abalone farm continues to perform efficiently and consistently despite
the tough economic climate.
Health Care
The companies under the Health Care division, Sekpharma (Pty) Ltd and Wynberg Pharmaceuticals (Pty) Ltd, focus
on ethical and consumer products as well as the production of natural products to promote health and hygiene and
food security in the agricultural and food processing sectors.
Revenue for the Health Care division has increased by 32% from R17m to R22m. This increase relates to a change
in the sales and distribution model adopted during the year and by expanding the company's customer base for
natural disinfectants and sanitisers.
Both revenue and cash generation from this operation continue to improve year on year.
Biotechnology
Genius Biotherapeutics ("Genius"), formerly known as Bioclones (Pty) Ltd, is South Africa and Africa's 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 of development and will soon be proceeding to Phase 1 clinical trials. The company partnered
with the University of Cape Town's ("UCT") Department of Medicine, UCT Lung Institute and Pulmonology and Immunity
unit to develop the therapeutic Dendritic Cell Vaccine ("DCV") against cancer.
Management continues with its plans to upgrade the manufacturing facility to increase efficiency at the facility
in Centurion. The scientific team at the Cape Town facility also updated its protocol to produce biologically
active granulocyte-colony stimulating factor (G-CSF) technology.
Enterprise development
Sekunjalo Media ("Sekmedia") achieved its turnaround by completing the implementation of its strategy to return
to company Events Social Marketing and Productions Afrika (Pty) Ltd ("espAfrika") to profitability from a R7m operating
loss in 2013 to a R7,7m operating profit in the 2014 financial year. 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 (GDP) of the Western Cape and the national economy.
Basis of preparation
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for provisional reports, and the requirements of the Companies Act of South Africa, as amended,
applicable to summary financial statements. The Listings Requirements require provisional reports to be prepared in
accordance with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain
the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of
the consolidated financial statements from which the condensed financial statements were derived are in terms of
International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation
of the previous consolidated annual financial statements, apart from the adoption of the standards listed below.
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interest of other entities
IFRS 13 Fair value measurement
As a result of adopting IFRS 10, the Group changed its accounting policy for assessing control over its investees. IFRS 10
introduces a new definition of control which requires the investor to assess control by referring to the investor's exposure
or rights to variable returns for its involvement with the investee and the ability to use its power to affect those returns.
The group applied the transitional provision of IFRS 10 and determined that they had control over the investment in Genius
Biotherapeutics from June 2014, the effective date that control changed.
In terms of IFRS 11, proportionate consolidation for joint ventures is no longer permitted. Joint arrangements that meet the
definition of a joint venture must be accounted for using the equity method. The Group has now applied IFRS 11 in accordance
with the transitional provisions which did not affect the current year’s results.
IFRS 12 is a disclosure standard requiring a wide range of disclosures about an entity's interests in subsidiaries, joint
arrangements, associates and unconsolidated 'structured entities'. The standard also requires disclosures about judgements
made by an entity to determine whether it controls another entity. The Group has included additional disclosure as prescribed
by the standard.
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurement, when
such measurements are required by other IFRSs. The revised definition of fair value is the price at which a transaction
to sell an asset or transfer a liability would take place between market participants at the measurement date. The Group
included additional disclosure as prescribed by this standard.
This summarised report is extracted from audited information, but is not audited itself. The annual financial statements
were audited by Grant Thornton (Cpt) Inc., who expressed an unmodified opinion thereon. The audited annual financial
statements and the auditor's report thereon are available for inspection at the company's registered office. The auditor's
report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy
of the auditor's report together with the accompanying financial information from the issuer's registered office.
The directors take full responsibility for the preparation of the provisional condensed consolidated financial results and
that the financial information has been correctly extracted from the underlying annual financial statements. This financial
information has been prepared under the supervision of Natasha September, Financial Controller, BCom (Hons), CA(SA).
Events post reporting date
The directors are not aware of any events post reporting date that materially affects the Group.
Future prospects
Our strategic intent to increase value in our core operational investments in our technology, marine, health care and
biothechnology and enterprise development sectors has shown excellent growth during the current year and the Group built
a strong platform for further growth over the next few years.
As we continue to build on our financial successes we believe that Sekunjalo is well positioned to further enhance
its earnings and is well set to further bolster its asset and net asset value 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
The Board of directors is pleased to announce that it has approved and declared a gross final dividend of 2 cents per
share for the year ended 31 August 2014 from income reserves. The final dividend amount, net of South African dividend
tax of 15% which equates to 0.3 cents per share, is therefore a net 1.7 cents per share for those shareholders that are
not exempt from Dividend Tax. The company will not be utilising any credits that relate to secondary tax on companies.
The number of ordinary shares in issue at the declaration date is 491 339 434 and the income tax number of the company
is 9314001034.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 13 February 2015
Trading ex dividend commences Monday, 16 February 2015
Record date Friday, 20 February 2015
Date of payment Monday, 23 February 2015
Share certificates may not be dematerialised or rematerialised between Monday, 16 February 2015, and Friday, 20 February 2015,
both days inclusive.
Proposed change of name
Shareholders are hereby advised that, due to strategic reasons, the Board of directors have proposed that the name of the
Company be changed to African Equity Empowerment Investments Limited, subject to shareholder approval at a general
meeting ("Proposed Change of Name").
The rationale and reason for the Proposed Change of Name is to better reflect the underlying businesses and maximising the
investments and opportunities of Sekunjalo going forward and to differentiate the Company from its private holding company.
A circular providing detailed information, as required, in respect of the Proposed Change of Name will be distributed to
Sekunjalo shareholders on or about Friday, 21 November 2014 and the relevant details will also be announced on SENS at the
appropriate time.
Appreciation
We would like to thank the Sekunjalo Board of directors for its continued strategic guidance, wise stewardship 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 as they
continue to contribute to the success of Sekunjalo.
MI Survé K Abdulla
Executive chairman Chief executive officer (CEO)
4 November 2014
Directors:
*Dr M Iqbal Survé (Executive Chairman); *Khalid Abdulla (CEO); Prof Vukile Mehana; Johannes Mihe Gaomab; Salim Young;
*Cherie Felicity Hendricks; *Chantelle Ah Sing; Aziza Amod; Takudzwa Hove
*Executive directors
Company secretary:
Carmelita Arendse
Registered address:
Quay 7, East Pier, Victoria and Alfred Waterfront, Cape Town, 8001,
Email:
carmen@sekunjalo.com
Transfer secretaries:
Link Market Services South Africa (Pty) Ltd
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein, 2001
Auditors:
Grant Thornton (Cpt) Inc, Cape Town
Sponsor:
PSG Capital (Pty) Ltd, Stellenbosch
Date: 04/11/2014 04:00:00 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
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