Wrap Text
Unaudited Consolidated Condensed Interim Results for the six months ended 30 September 2014
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
UNAUDITED CONSOLIDATED CONDENSED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
STATEMENT OF FINANCIAL POSITION
Rand thousands 30 Sep 2014 30 Sep 2013 31 Mar 2014
Unaudited Unaudited Audited
ASSETS
Non-current assets 9 571 792 1 435 388 8 928 667
Plant and equipment 732 642 342 079 525 316
Owner-occupied property 758 646 417 367 838 496
Investment property 690 340 549 073 669 619
Intangible assets 2 923 898 16 184 2 817 234
Goodwill 3 882 514 14 016 3 708 837
Equity-accounted investees 240 673 - 132 698
Other investments 3 644 3 673 3 644
Long-term receivables 249 881 51 697 146 582
Deferred tax assets 89 554 41 299 86 241
Current assets 2 848 490 1 404 142 2 084 300
Non-current assets held for sale 54 437 1 785 54 536
Inventories 695 858 710 749 555 433
Programming rights 419 946 - 282 682
Trade and other receivables 1 359 014 681 503 1 024 750
Current tax assets 13 892 7 378 6 087
Cash and cash equivalents 305 343 2 727 160 812
Total assets 12 420 282 2 839 530 11 012 967
EQUITY AND LIABILITIES
Total equity 8 954 271 1 488 813 3 948 047
Stated capital 6 665 382 320 366 1 692 429
Treasury shares (17 794) (17 794) (17 794)
Reserves 1 084 419 1 186 241 1 043 334
Equity attributable to owners of the parent 7 732 007 1 488 813 2 717 969
Non-controlling interest 1 222 264 - 1 230 078
Non-current liabilities 1 245 329 107 797 5 568 810
Deferred tax 479 415 8 016 486 583
Post-employment medical aid benefits 91 055 85 567 91 180
Interest-bearing liabilities 550 774 13 986 4 868 343
Share-based liabilities 122 465 - 122 465
Operating lease accruals 1 620 228 239
Current liabilities 2 220 682 1 242 920 1 496 110
Current tax payable 13 915 - 529
Post-employment medical aid benefits 6 205 5 116 6 280
Interest-bearing liabilities 273 718 30 541 67 161
Trade and other payables 1 143 869 545 177 861 047
Provisions - - 23 309
Bank overdrafts 782 975 662 086 537 784
Total liabilities 3 466 011 1 350 717 7 064 920
Total equity and liabilities 12 420 282 2 839 530 11 012 967
Net asset value 7 732 007 1 488 813 2 717 969
Net asset value per share after
treasury shares (cents) 179 217 229
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Rand thousands 30 Sep 2014 30 Sep 2013*
Unaudited Unaudited % change
Revenue 2 437 982 1 053 099 131,5
Gross profit 1 001 332 274 042 265,4
Operating profit before finance costs 233 495 98 787 136,4
Loss from equity-accounted investees (1 034) -
Finance income 12 671 862 1 370,0
Finance expenses (56 023) (21 778) 157,2
Profit before tax 189 109 77 871 142,8
Income tax (expense)/income (91 645) 496
Profit for the period from continuing operations 97 464 78 367 24,4
Profit/(loss) for the period from discontinued
operations 380 (50 312)
Total income for the period 97 844 28 055 248,8
Other comprehensive income for the period
net of related tax effects:
Foreign operations - foreign currency
translation differences (5 203) -
Total comprehensive income for the period 92 641 28 055 230,2
Profit attributable to:
Owners of the parent 55 642 28 055
Non-controlling interests 42 202 -
97 844 28 055 248,8
Total comprehensive income attributable to:
Owners of the parent 52 279 28 055
Non-controlling interests 40 362 -
92 641 28 055 230,2
* Restated, refer to note 7.
CONDENSED STATEMENT OF CASH FLOWS
Rand thousands 30 Sep 2014 30 Sep 2013
Unaudited Unaudited
Net cash flow from operating activities (240 597) (125 881)
Net cash flow from investing activities (686 753) (61 273)
Net cash flow from financing activities 826 690 30 243
Net decrease in cash and cash equivalents (100 660) (156 911)
Cash and cash equivalents at the beginning of the period (376 972) (502 448)
Cash and cash equivalents at the end of the period (477 632) (659 359)
STATEMENT OF CHANGES IN EQUITY
Rand thousands Stated Treasury Other Retained
capital shares reserves income
Balance at 1 April 2013 312 156 (17 794) 298 669 867 555
Total comprehensive profit
for the period - - - 28 055
Transactions with owners
Share options exercised 8 210 - - (8 038)
Balance at 30 September 2013 320 366 (17 794) 298 669 887 572
Balance at 1 April 2014 1 692 429 (17 794) 317 108 726 226
Total comprehensive profit
for the period - - (3 363) 55 642
Transactions with owners
Issue of ordinary shares 4 961 451 - - -
Share options exercised 11 502 - - (11 194)
Change in ownership interest
Dividends declared - - - -
Acquisition of subsidiary with
non-controlling interest - - - -
Acquisition of non-controlling
interest without a change in
control - - - -
Balance at 30 September 2014 6 665 382 (17 794) 313 745 770 674
Rand thousands Non-con-
trolling Total
Total interest equity
Balance at 1 April 2013 1 460 586 - 1 460 586
Total comprehensive profit for the period 28 055 - 28 055
Transactions with owners
Share options exercised 172 - 172
Balance at 30 September 2013 1 488 813 - 1 488 813
Balance at 1 April 2014 2 717 969 1 230 078 3 948 047
Total comprehensive profit for the period 52 279 40 362 92 641
Transactions with owners
Issue of ordinary shares 4 961 451 - 4 961 451
Share options exercised 308 - 308
Change in ownership interest
Dividends declared - (41 563) (41 563)
Acquisition of subsidiary with
non-controlling interest - (2 419) (2 419)
Acquisition of non-controlling interest
without a change in control - (4 194) (4 194)
Balance at 30 September 2014 7 732 007 1 222 264 8 954 271
Rand thousands 30 Sep 2014 30 Sep 2013
Unaudited Unaudited
Composition of other reserves
Revaluation of investments 2 912 2 861
Capital redemption reserve fund 70 440
Surplus on disposal of subsidiary and associated companies 7 923 7 923
Translation reserve (2 218) -
Surplus on revaluation of land and buildings 305 058 287 445
313 745 298 669
CONDENSED SEGMENTAL REPORT
Rand thousands Branded
Product
Distri-
Media Properties bution Textiles
2014
Segment revenue
Gross sales 1 200 606 64 851 631 952 334 384
Inter-segment sales (these
transactions are at arm's length) - (17 905) - (7 081)
1 200 606 46 946 631 952 327 303
Less: Revenue attributable to
discontinued operations - - - -
Revenue as per statement of
profit or loss and other
comprehensive income 1 200 606 46 946 631 952 327 303
Segment results
Operating profit/(loss)
from operations 212 042 44 076 2 202 (12 326)
Less: Operating profit from
discontinued operations - - - -
Operating profit/(loss) from
continuing operations 212 042 44 076 2 202 (12 326)
2013*
Segment revenue
Gross sales - 56 166 419 408 398 170
Inter-segment sales (these
transactions are at arm's length) - (23 557) - (25 656)
- 32 609 419 408 372 514
Less: Revenue attributable to
discontinued operations - - - -
Revenue as per statement of
profit or loss and other
comprehensive income - 32 609 419 408 372 514
Segment results
Operating profit/(loss)
from operations - 37 188 14 809 10 869
Less: Operating loss from
discontinued operations - - - -
Operating profit/(loss) from
continuing operations - 37 188 14 809 10 869
* Restated, refer to note 7.
Rand thousands Head
Office and
Centralised
Industrials Clothing Services Total
2014
Segment revenue
Gross sales 225 585 295 494 - 2 752 872
Inter-segment sales (these
transactions are at arm's length) - - - (24 986)
225 585 295 494 - 2 727 886
Less: Revenue attributable to
discontinued operations - (289 904) - (289 904)
Revenue as per statement of
profit or loss and other
comprehensive income 225 585 5 590 - 2 437 982
Segment results
Operating profit/(loss)
from operations 9 836 (3 940) (18 015) 233 875
Less: Operating profit from
discontinued operations - 380 - 380
Operating profit/(loss) from
continuing operations 9 836 (4 320) (18 015) 233 495
2013*
Segment revenue
Gross sales 217 125 320 588 - 1 411 457
Inter-segment sales (these
transactions are at arm's length) - (87) - (49 300)
217 125 320 501 - 1 362 157
Less: Revenue attributable to
discontinued operations - (309 058) - (309 058)
Revenue as per statement of
profit or loss and other
comprehensive income 217 125 11 443 - 1 053 099
Segment results
Operating profit/(loss)
from operations 14 546 (45 745) 23 878 55 545
Less: Operating loss from
discontinued operations - (43 242) - (43 242)
Operating profit/(loss) from
continuing operations 14 546 (2 503) 23 878 98 787
* Restated, refer to note 7.
STATISTICS PER SHARE
In cents, where applicable 30 Sep 2014 30 Sep 2013
Unaudited Unaudited
Weighted average number of shares in issue ('000) 3 905 028 683 354
Number of shares in issue ('000) 4 318 212 685 925
Diluted weighted average number of shares in issue ('000) 3 929 671 730 820
Basic earnings/(loss) 1.4 4.1
Continuing operations 1.4 11.5
Discontinued operations - (7.4)
Headline earnings/(loss) 1.3 4.1
Continuing operations 1.3 11.5
Discontinued operations - (7.4)
Diluted earnings/(loss) 1.4 3.8
Continuing operations 1.4 10.7
Discontinued operations - (6.9)
Diluted headline earnings/(loss) 1.3 3.8
Continuing operations 1.3 11.2
Discontinued operations - (7.4)
Reconciliation between profit and headline earnings
Income attributable to shareholders 55 642 28 055
Bargain purchase (1 639) -
Surplus on disposal of property, plant and equipment (2 428) (173)
Loss on disposal of property, plant and equipment - 131
Total tax effect of adjustments 647 16
Headline earnings 52 222 28 029
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
1 Basis of preparation
The unaudited consolidated condensed results for the six months to September 2014
have been prepared in accordance with and containing the information as required by
International Accounting Standard (IAS) 34: Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, and are
in compliance with the Listings Requirements of the JSE Limited. These results do not
include all the information required for a complete set of IFRS financial statements.
However, selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the Group's financial
position and performance since the last annual consolidated financial statements as
at and for the year ended 31 March 2014.
These results have been prepared under the supervision of the Financial Director,
Gys Wege (CA) SA, and have not been audited or reviewed by the Group's auditors,
KPMG Inc.
2 Significant accounting policies
The unaudited consolidated condensed results have been prepared under the historical
cost convention, except for the revaluation of certain properties and financial
instruments. The accounting policies adopted are consistent with those followed in
the preparation of the Group's annual financial statements for the year ended
31 March 2014, except for the standards and amendments to standards that became
effective on 1 January 2014: IAS 32: Financial Instruments - Presentation, IAS 36:
Impairment of Assets and IAS 39: Financial Instruments - Recognition and Measurement.
The impact of these amendments are not considered material.
3 Capital expenditure and commitments
Rand thousands Capital expenditure Contractual commitments
30 Sep 2014 30 Sep 2013 30 Sep 2014 30 Sep 2013
Unaudited Unaudited Unaudited Unaudited
Investment property 20 721 23 844 40 000 -
Land and buildings 436 216 87 600 -
Plant and equipment 196 111 28 360 283 000 600
Intangible assets 161 147 5 060 - -
Total capital expenditure 378 415 57 480 410 600 600
The above includes amounts acquired through business combinations - refer to note 6.
The capital commitments are expected to be incurred in the remainder of the 2015
reporting period.
4 Issue of shares
The authorised share capital of the company was increased from 200 million N shares
to 10,550 billion N shares of no par value. On 29 April 2014 the company concluded
a R5 billion rights issue to shareholders and issued 3,125 billion new N ordinary
shares, the proceeds of which was utilised to settle debt.
During the period 6 275 694 ordinary shares were issued in terms of the Group's
share incentive scheme.
5 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.
6 Business combinations
Subsidiaries acquired during the period
Net profit/
Revenue (loss)
contributed contributed
% voting to the to the
Subsidiary Acquisition interest Group Group
name date Segment acquired Description R'000 R'000
Longkloof Limited 1 Sep 2014 Media 100% Off-shore 5 637 (1 679)
and its subsidiaries media
and associates investment
Crystal Brook 1 Sep 2014 Media 100% Content 1 378 373
Distribution distribution
Proprietary Limited
TVPC Media 1 Jul 2014 Media 60% Producer of 408 (1 002)
Proprietary Limited long-format
TV series
(Youth sport)
Limtech Biometric 1 Apr 2014 Branded 100% Provider of 4 458 198
Solutions Proprietary Product access security
Limited Distribution solutions,
specialising in
biometric
fingerprint
recognition
Deneb Invest 141 1 Aug 2014 Branded 51% Distributor of 1 913 (680)
Holdco Proprietary Product stationery
Limited Distribution
Consideration transferred
The following table summarises the consideration paid for the entities and the amount of
the assets acquired and liabilities assumed recognised at the acquisition date.
2014 2013
Unaudited Unaudited
Consideration R'000 R'000
Cash 514 255 4 842
Contingent consideration 1 400 13 089
Total consideration 515 655 18 061
Recognised amounts of identifiable assets
acquired and liabilities assumed
Property, plant and equipment 21 263 11 959
Intangible assets 138 542 -
Deferred tax asset 339 -
Investments - 93
Investments in associates 102 790 -
Inventories 3 264 8 018
Trade and other receivables 55 904 12 560
Programming rights 10 459 -
Other financial assets 18 712 -
Cash and cash equivalents 35 069 -
Non-current loan (3 624) (8 628)
Deferred liabilities - (4 710)
Trade and other payables (40 267) (11 458)
Taxation payable (1 184) -
Bank overdrafts (69) (3 789)
Total identifiable net assets 341 198 4 045
Non-controlling interest 2 419 -
Bargain purchase (1 639) -
Goodwill 173 677 14 016
Total consideration 515 655 18 061
Measurement of fair values
The assets and liabilities acquired in the media segment have been measured on a
provisional basis. If new information is obtained within one year of the date of
acquisition about the facts and circumstances that existed at the date of
acquisition, the accounting for the acquisition will be revised.
7 Change in comparatives
The result of discontinued operations have been separately disclosed on the face
of the statement of profit or loss and other comprehensive income. Where practical,
the prior year results have been restated accordingly.
The discontinued operations relate to the disposal of the apparel manufacturing
business to SACTWU as announced on SENS on 29 October 2013.
8 Post-period-end events
Separate listing and unbundling of Seardel's non-media investments
The Seardel board of directors approved the separate listing of Seardel's non-media
investments via a newly created investment holding company, Deneb Investments Limited
("Deneb") on the securities exchange operated by the JSE Limited. Deneb is to
unbundle and list on 1 December 2014, further details of which was published on SENS
on 14 November 2014.
Post the Deneb listing and unbundling, Seardel will remain a media-focused
investment company.
The non-media investments have not been disclosed as held for distribution as it
does not meet the classification criteria as at 30 September 2014. However, below
is the pro forma financial effect for illustrative purposes in order to provide
information on how the transaction may affect the financial results and position of
Seardel at the reporting date.
Pro forma consolidated condensed statement of profit or loss and other
comprehensive income
Rand thousands 30 Sep 2014 30 Sep 2013
Unaudited Unaudited
Revenue 1 200 606 -
Gross profit 711 922 -
Operating profit before finance costs 212 042 -
Equity-accounted results (1 034) -
Finance income (36 563) -
Finance expenses 8 527 -
Profit before tax 182 972 -
Income tax (90 021) -
Profit for the period from continuing operations 92 951 -
Profit for the period from discontinued operations 4 893 28 055
Total comprehensive income for the period 97 844 28 055
Other comprehensive income: -
Foreign operations - foreign currency
translation differences (5 203) -
Other comprehensive income for the period (5 203) -
Total comprehensive income for the period 92 641 28 055
Profit attributable to:
Owners of the parent 57 482 28 055
Non-controlling interests 40 362 -
97 844 28 055
Total comprehensive income attributable to:
Owners of the parent 52 279 28 055
Non-controlling interests 40 362 -
92 641 28 055
Pro forma consolidated statement of financial position
Rand thousands 30 Sep 2014 30 Sep 2014 31 Mar 2014
Unaudited Unaudited Unaudited
ASSETS
Non-current assets 7 914 909 - 7 424 344
Plant and equipment 428 868 - 502 778
Owner-occupied property 424 237 - 238 952
Intangible assets 2 905 912 - 2 808 037
Equity-accounted investees 240 674 - 132 698
Long-term receivables 18 603 - 19 742
Goodwill 3 864 771 - 3 694 634
Deferred tax 31 844 - 27 503
Current assets 2 979 645 1 488 813 2 445 823
Net assets held for distribution 1 618 978 1 488 813 1 484 051
Inventories 23 623 - 18 962
Programming rights 419 946 - 282 682
Trade and other receivables 605 651 - 496 912
Current tax asset 6 681 - 5 984
Cash and cash equivalents 304 766 - 157 232
Total assets 10 894 554 1 488 813 9 870 167
EQUITY AND LIABILITIES
Total equity 8 954 604 1 488 813 3 948 047
Stated capital 6 665 382 320 366 1 692 429
Treasury shares (17 794) (17 794) (17 794)
Reserves 1 084 419 1 186 241 1 043 334
Equity attributable to owners of the parent 7 732 007 1 488 813 2 717 969
Non-controlling interests 1 222 597 - 1 230 078
Non-current liabilities 1 134 485 - 5 455 388
Deferred tax 474 921 - 480 524
Interest-bearing liabilities 537 099 - 4 852 399
Share-based liabilities 122 465 - 122 465
Current liabilities 805 465 - 466 732
Current tax payable 13 711 - 378
Interest-bearing liabilities 241 321 - 63 967
Trade and other payables 550 433 - 402 387
Total liabilities 1 939 950 - 5 922 120
Total equity and liabilities 10 894 554 1 488 813 9 870 167
The board of directors are responsible for the compilation, contents and
presentation of the unaudited pro forma financial information contained in this
announcement and for the financial information from which it has been prepared.
9 Related parties
The below note is an explanation of transactions and balances with related parties
that have significantly changed from the note in the financial statements for the
period ending 31 March 2014.
Transactions with Hosken Consolidated Investments Limited (HCI) (the ultimate
holding company), entities in which HCI has an interest and SACTWU (shareholder
in Seardel)
Rand thousands Income/(Expense) Balance receivable/(owing)
Transaction values Balance outstanding
for the period ending as at
30 Sep 2014 31 Mar 2014 30 Sep 2014 31 Mar 2014
Unaudited Audited Unaudited Audited
(6 months) (12 months) (6 months) (12 months)
SACTWU - disposal of apparel
manufacturing operation 4 061 (31 260) 74 979 107 588
SACTWU - loan advance relating
to the disposal of the apparel
manufacturing operation - (957) - (30 957)
SACTWU - loan relating to the
acquisition of Sabido
Investments* (5 987) (33 138) - (1 363 860)
HCI - preference shares
relating to the acquisition
of Sabido Investments
Proprietary Limited* (13 971) (77 341) - (3 183 105)
HCI loan at prime,
repayable on demand 537 - 69 580 -
Trade Call Investments
Apparel Proprietary
Limited (SACTWU a
shareholder) 380 - (1 810) -
* The repayment of these balances as at 31 March 2014 was out of the capital raised
through the rights issue - refer to note 4 for further information.
An amount of R34,2 million paid to HCI Invest6 Holdco Proprietary Limited for
underwriting fee relating to the rights issue in note 4 has been capitalised against
stated capital during the period.
Fees paid to HCI, Remgro Limited and Longkloof Limited for management and
administration services amounted to R9,2 million, R0,8 million and R1,3 million
respectively.
Business combinations with related parties
Sabido Investments Proprietary Limited (Sabido), a subsidiary of Seardel, acquired
the shares of the following companies:
1 100% of the issued share capital in Longkloof Limited, which was previously owned
80% by Deepkloof Limited, a subsidiary of HCI for a purchase price of
R497 million; and
2 100% of the issued share capital of Crystal Brook Distribution Proprietary Limited,
which is was previously owned 80% by HCI International Holdings Limited
(HCI International), a wholly-owned subsidiary of HCI and 20% by Venfin Media
Beleggings Proprietary Limited (Venfin), a wholly-owned subsidiary of Remgro for
a purchase price of R11 million;
further details of which was published on SENS on 28 August 2014.
Seardel acquired 100% of the issued share capital of Limited Biometric Solutions
Proprietary Limited, which was previously owned by HCI, for a purchase price of R1.
Refer to note 6 for further detail on the business combinations.
COMMENTARY
The results for the six months ended 30 September 2014 are not comparable to those
reported in the prior period as the current period includes the Group's 64% interest
in Sabido Investments (Pty) Ltd ("Sabido") which was acquired in the second half of
the previous financial year. Sabido is the investment vehicle that houses e.tv, eSat.tv,
Yfm and Sasani Studios amongst others. Furthermore, in April 2014 Seardel successfully
concluded a R5 billion rights issue which resulted in the Group issuing 3,125 billion
N ordinary shares.
In addition to the above, shareholders should note the following items which are
reflected in the results and are important considerations in analysing the overall
financial performance for the period ended 30 September 2014:
(a) Financing expenses include R20 million relating to the debt assumed on the
acquisition of Sabido. This debt was fully repaid on 25 April 2014.
(b) The amortisation of the intangible assets arising on the acquisition of Sabido
amounted to R40 million for the six-month period.
(c) The prior period results included some R38 million of once-off income relating
to the final piece of the litigation with former directors, as more fully disclosed
in the SENS announcement of 10 May 2013.
SEGMENTS
Media
As the Group's interest in Sabido was only acquired in the second half of the prior
financial year, there are no comparative results for the media segment. However, we
believe that the users of this financial information will benefit from some information
on Sabido's comparative performance year on year.
Sabido's performance
Sabido delivered an operating profit before finance costs and amortisation of the
intangible asset raised on acquisition of R252 million for the first half of the financial
year. Although this is 36% lower than the previous year, it is in line with the
Company's budget expectations. Net profit after tax amounted to R154 million in
comparison to R266 million in the prior year. The year-on-year decrease is mainly
attributable to the full cost of the e.tv multi-channel business, as well as Platco,
which both had limited costs in the prior year owing to their October 2013 launch.
Also included in the results for the current period are Longkloof, purchased for
$45,9 million and Crystal Brook, purchased for R11 million. The purchase of these
entities became unconditional on 12 September 2014 and paid for on 19 September 2014.
Excluding the investment into the multi-channel operations and the Longkloof and
Crystal Brook acquisitions, net profit after tax amounted to R281 million compared to
a prior year profit after tax of R290 million, a year-on-year decrease of 3%. The results
of the historical business were negatively affected by the general downturn in the
South African economy as well as aggressive local programming investment from Sabido's
competitors, which saw classical advertising revenue come under pressure in the first
half of the year. The drop in revenue has been partially mitigated by careful management
of costs as well as the minor subsidiaries doing much better than prior years. The likes
of Sasani Studios, Cape Town Film Studios and Silverline 360 are all performing
significantly ahead of budget and the prior year. The continued delay in the roll-out of
Digital Terrestrial Television (DTT) also had a negative effect on the results.
Judgement was handed down by Judge Tsoka on 25 August in the SABC's action against
Platco, where the SABC sought to prohihit the broadcast of SABC 1, 2 and 3 on OpenviewHD.
The SABC's application was dimissed with the costs of three counsel and the SABC's
application for leave to appeal was similarly dismissed with costs. The SABC now has
to petition the SCA for relief.
Finally, the month of October has seen the very public resignation of the Chief
Executive Officer, Marcel Golding and the Chief Corporate Officer, Bronwyn Keene-Young.
The management team currently in place at Sabido has been supported by the appointment
of Kevin Govender as Acting Chief Executive Officer and remains motivated, enthused
and determined to keep the business steady and ensure that the fundamentals which are
in place are solid, while addressing the various issues that continuously arise in a
business as varied as Sabido.
Non-media
Subsequent to the reporting date of 30 September 2014 Seardel has obtained all
necessary approvals to unbundle and separately list Seardel's non-media investments
via a newly created investment holding company, Deneb Investments Limited.
Property segment
The property segment results exclude any Sabido properties which are accounted for
under the media segment.
Revenue increased 15% to R65 million with revenue from external tenants now
representing 72% of the total revenue for this segment. Operating profit before finance
costs increased by 19% to R44 million, up from R37 million in the prior period.
Branded product segment
The branded product segment recorded revenue growth of 51% to R632 million. The revenue
growth is mainly as a result of:
- the launch of Microsoft's Xbox One;
- the acquisition, by Prima Interactive, of the distribution rights for Electronic
Arts games; and
- the acquisition, by Brand ID, of the distribution rights for a number of sporting
brands, most notably Canterbury, Mizuno, Skins, Dunlop and Slazenger.
Despite the pleasing revenue growth, operating profit before finance costs declined from
R15 million in the prior period to R2 million in the current period. The decline in
profitability is due to the performance of Seartec, which is predominantly a distributor
of the Sharp range of office automation products and calculators. We identified Seartec
as a business that has underperformed on its potential and thus made a decision to
invest heavily into the management structures, facilities and IT infrastructure of the
business. The underlying performance of this business is largely on track with
expectations with revenue and gross margins slightly up on the prior year, but the
incremental costs resulted in profitability dropping off. We only expect the benefit of
these extra costs to be fully evident over the next few financial years.
It should be noted that the first half of the financial year in this segment has
historically been weaker than the second half. The extra costs associated with
investments into Seartec and the acquisition of the additional distribution rights
should be better amortised over the full-year revenues.
Textile segment
Trading conditions for the businesses within this sector were tough throughout the
current financial period. The extended industrial action which took place in our
customer and supplier bases, compounded by shorter industrial action in one of our
own businesses, coupled with a reduction in government tender awards around general
election time, saw revenue drop by 16% to R334 million. The turnover decline resulted
in an operating loss of R12 million which was down from a R11 million profit in the
prior period. Most of the losses were recorded in the first quarter of the financial
year with the performances stabilising from that point on.
Industrial segment
The performance of the industrial segment is a reflection of the tough environment
that the manufacturing businesses faced in the period under review.
Revenue grew by 5% to R226 million, although this was entirely due to the acquisition
of the Custom Bulk Bag business not being effective for the full six months in the
comparative period. Operating profit declined from R15 million in the prior period to
R10 million in the period under review. This decline was as a result of industrial action
in the automotive sector from which one of our businesses derives the majority of its
revenue and the industrial action which took place in our own Polypropylene business.
On behalf of the board
Stuart Queen Gys Wege
Chief Executive Officer Financial Director
Cape Town
20 November 2014
CORPORATE INFORMATION
SEARDEL INVESTMENT CORPORATION LIMITED
("Seardel" or "the Group")
The company's shares are listed under the Consumer Goods - Personal and Household Goods
Sector of the JSE Limited.
Registration number: 1968/011249/06 (Incorporated in the Republic of South Africa)
JSE share code: SER ISIN: ZAE000029815
JSE share code: SRN ISIN: ZAE000030144
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), M H Ahmed*^ (Lead Independent Director), D Duncan,
T G Govender*, N Jappie*^, 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
www.seardel.co.za
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