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Abridged Audited Group Results for the year ended 30 September 2014
CULLINAN HOLDINGS LTD
TOURISM, LEISURE & FINANCIAL SERVICES
(Registration number 1902/001808/06)
(Share code: CUL ISIN: ZAE000013710)
(Share code: CULP ISIN: ZAE000001947)
("the Company" or "the Group")
ABRIDGED AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014
GROUP FINANCIAL HIGHLIGHTS
Operating profit up 40% and profit before tax up by 34% to R101m
50% average growth in profit before tax over the last three years
Turnover up 39% and R119m cash generated by operations
Chester Finance acquired effective 1 October 2014
Group condensed statement of financial position
Audited as at Audited as at
30 September 30 September
2014 2013
R'000 R'000
ASSETS
Non-current assets 329 788 267 141
Property, plant and equipment 200 939 140 018
Investment properties 10 900 10 900
Goodwill 69 981 66 758
Intangible assets 27 513 31 041
Investment in associate companies 3 697 4 243
Investment in joint ventures 7 946 5 341
Deferred tax asset 8 812 8 840
Current assets 524 091 502 373
Other current assets 338 034 296 434
Cash and cash equivalents 186 057 205 939
Total assets 853 879 769 514
EQUITY AND LIABILITIES
Ordinary shareholders' equity 380 284 323 373
Preference shareholders' equity 546 546
Non-controlling interest 4 180 1 804
Total shareholders' equity 385 010 325 723
Non-current liabilities 14 647 15 356
Preference shares 500 500
Deferred tax liability 6 288 5 688
Operating lease accrual 7 859 9 168
Current liabilities 454 222 428 435
Other current liabilities 454 222 428 435
Total equity and liabilities 853 879 769 514
Group condensed statement of comprehensive income
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
R'000 R'000
Revenue 836 362 600 553
Turnover 828 381 592 689
Net operating expenses (735 391) (526 484)
Trading profit 92 990 66 205
Net finance income 7 682 7 672
Preference dividends paid (55) (55)
Share of profit of associates and
joint ventures 275 1 490
Profit before taxation 100 892 75 312
Tax expense (29 569) (18 314)
Profit for the year 71 323 56 998
Other comprehensive income:
Exchange differences on translating
foreign operations 306 262
Total comprehensive income for the year 71 629 57 260
Profit attributable to:
equity holders 67 990 56 859
non-controlling interest 3 333 139
Total comprehensive income attributable to:
equity holders 68 296 57 121
non-controlling interest 3 333 139
Earnings per share (cents) 8.50 7.85
Diluted earnings per share (cents) 8.33 7.73
Group condensed statements of changes in equity
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
R'000 R'000
Ordinary share capital
Balance at beginning of year 7 927 7 184
Issued during year 75 743
Balance at end of year 8 002 7 927
Share premium
Balance at beginning of year 140 942 59 905
Premium on issue of shares 8 144 81 037
Balance at end of year 149 086 140 942
Share capital reduction reserve fund
Balance at beginning and end of year 20 876 20 876
Capital redemption reserve fund
Balance at beginning and end of year 4 4
Foreign currency translation reserve
Balance at beginning of year (1 665) (1 927)
Reserve on translation of foreign subsidiary 306 262
Balance at end of year (1 359) (1 665)
Revaluation reserve
Balance at beginning and end of year 870 870
Share-based payment reserve
Balance at beginning of year 2 225 -
Expense for the year 4 401 2 225
Balance at end of year 6 626 2 225
Accumulated profit / (loss)
Balance at beginning of year 152 194 102 519
Attributable income for year 67 990 56 859
Ordinary dividend declared (24 005) (7 184)
Balance at end of year 196 179 152 194
Ordinary shareholders' equity 380 284 323 373
Non-controlling interest
Balance at beginning of year 1 804 102
Arising from business combination - 1 645
Profit attributable to non-controlling
interest for year 3 333 139
Dividend paid to non-controlling interest (957) (82)
Balance at end of year 4 180 1 804
Preference shareholders' equity
Balance at beginning of year 500 500
Balance at end of year 500 500
Total comprehensive income is made up of
Profit for year 71 323 56 998
- Attributable to equity shareholders 67 990 56 859
- Attributable to non-controlling interest 3 333 139
Translation of foreign subsidiary 306 262
71 629 57 260
Group abridged condensed statement of cash flows
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
R'000 R'000
- Cash generated by operations 119 433 54 907
Net cash inflow / (outflow) from
operating activities 73 245 37 464
Net cash outflow from
investing activities (92 591) (45 247)
Net cash outflow from
financing activities (957) (82)
Net (decrease) / increase in cash
and cash equivalents (20 303) (7 865)
Effect of exchange rate changes on cash
and cash equivalents (360) 1 287
Cash acquired on acquisition 649 23 938
Cash and cash equivalents
at beginning of the year 205 737 188 377
Cash and cash equivalents
at end of the year 185 723 205 737
Notes
1. BASIS OF PREPARATION
The group condensed financial statement extracts have been prepared in accordance with
the JSE Listings Requirements, the framework and the recognition requirements of International
Financial Reporting Standards ("IFRS"), and in terms of IAS 34 - Interim Financial Reporting as
well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and in compliance with the South African Companies Act (2008). The accounting policies
and methods of computation used in the preparation of the extracted results are consistent
with those used in the annual financial statements for the year ended 30 September 2013.
2. NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 September 30 September
2014 2013
Ordinary shares ('000)
October - August 800 173 718 355
September 800 173 792 701
Weighted average number of net shares
in issue 800 173 724 551
Adjusted for effect of future share-based
compensation payments 16 119 10 541
Diluted weighted average number of shares 816 293 735 092
Determination of headline earnings: R'000 R'000
Earnings attributable to ordinary shareholders 67 990 56 859
Adjustment to fair value of investment
property - (3 000)
Losses on disposal
of property, plant and equipment 1 557 211
Total tax effect (436) 563
Headline earnings 69 111 54 633
Headline earnings per share (cents) 8.64 7.54
Diluted headline earnings per share (cents) 8.47 7.43
Dividends per share (cents) 3.00 1.00
3. BUSINESS COMBINATION
Springbok Atlas Namibia (Pty) Ltd
On 1 October 2013, the Company acquired 100% of the issued share capital of Springbok Atlas Namibia (Pty) Ltd.
Springbok Atlas Namibia is engaged in coach charter and touring throughout Namibia, as well as running commuter
transport for certain clients. This business was acquired as part of the larger transaction in which Cullinan acquired the
tourism interests of Imperial Holdings Limited as disclosed in the prior year integrated report.
The acquisition date fair value of assets acquired and liabilities assumed and the consideration transferred were:
R'000
Property, plant and equipment 7 720
Trade and other receivables 1 911
Cash and cash equivalents 649
Trade and other payables (2 061)
Net Asset Value 8 219
Purchase consideration paid through issue of shares (7 471 833) 8 219
The property, plant and equipment consists of vehicles, fixtures and fittings and computer software and equipment
The gross amount due under trade and other receivables is R1.911 million of which all is expected to be collectible.
Since the acquisition date, the following amounts have been included in the statement of comprehensive income for
Cullinan for the year:
R'000
Revenue 19 861
Profit (357)
Acquisition costs allocated to the statement of comprehensive income 66
Peak Incentives
On 1 March 2014, Silverton Travel (Pty) Ltd t/a Edusport, a 75% owned subsidiary of the Company acquired the business
of Peak Incentives. The acquisition consisted primarily of the staff and intellectual capital of the
business. Peak Incentives is a specialist incentive organiser focusing on a blue chip corporate clientele.
Edusport currently have a division focusing on incentives and the merger of the Peak and Edusport incentives business
will provide the combined business with scale, better efficiencies and improved business practices.
Goodwill arising on acquisition is primarily incurred as a result of the above.
R'000
Purchase consideration payable out of cash reserves 3 000
Goodwill 3 000
Since the acquisition date, the following amounts have been included in the statement of comprehensive income for
Cullinan for the year:
R'000
Revenue 1 549
Profit (192)
No external acquisition costs were incurred
4. ACQUISITION AFTER PERIOD END
On 1 October 2014, Cullinan Holdings Limited acquired the trade finance business of Chester Finance (Pty)
Ltd. Goodwill on acquisition arose from the purchase of the trade name, business, client base and facilities with related securities, the staff,
intellectual capital and the local book debt. The business will trade under the name Chester Finance - A Division of
Cullinan Holdings Limited. The acquisition was funded out of cash reserves. Chester was acquired in line with the group strategy to
expand into the financial services sector and will provide the group with additional skills and expertise in this area.
The carrying value of the assets as noted below is based upon unaudited amounts and are expected to approximate
the fair value of assets before the acquisition.
The assets acquired as at 1 October 2014 arising from the acquisition are as follows:
Estimated fair
value
R'000
Property, plant and equipment 280
Trade receivables 45 761
Trade and other payables (316)
Net asset value acquired 45 725
Purchase consideration payable out of cash reserves 75 761
Goodwill (provisional) 30 036
The property, plant and equipment consists of vehicles, fixtures and fittings and computer software and equipment.
The gross amount due under trade and other receivables is R45.761 million of which all is expected to be collectible.
R000
Acquisition costs 2 792
If this business had been included in the group statement of comprehensive income from the beginning of the
financial year, the revenue would have been R397m and impact on profit before interest and tax would have been
a profit of R11m.
5. Segmental reporting
Travel and Marine and Financial Corporate
Tourism Boating Services Services Total
R'000 R'000 R'000 R'000 R'000
30 September 2014
Revenue 721 842 48 833 65 959 (272) 836 362
Operating profit 132 045 2 070 5 207 (46 332) 92 990
Profit before tax 132 320 2 070 12 889 (46 387) 100 892
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
Profit before tax 93 465 1 002 13 397 (32 552) 75 312
Annual financial statements
These group condensed financial statement extracts should be read in conjunction with the audited 2014 annual
financial statements issued on the 15 December 2014. The group financial statements were prepared by
D Standage, the Financial Director of the Group.
The directors take full responsibility for the preparation of this abridged report extracted from audited financial information
has been correctly extracted from the underlying annual financial statements.
Approval of annual financial statements
The annual financial statements were approved by the Board of Directors on 15 December 2014.
Audit opinion
These abridged consolidated group financial statements have been extracted from the issuer's audited
annual financial statements upon which Mazars have issued an unqualified report but has not itself been audited.
The auditor's report does not necessarily report on all of the information contained in this announcement/
financial results. 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.
Annual general meeting
The annual general meeting of Shareholders will be held in the boardroom, 2nd floor, Travel House, 6 Hood Avenue,
Rosebank at 10-00 on the 27th February 2015 to transact the business as stated in the annual general meeting notice
forming part of the integrated annual report. Record dates will be published once the printing of the annual report
has been finalised.
INTRODUCTION
Cullinan Holdings is pleased to report an excellent group performance in 2014. The group's
Operating profit increased by 40% and profit before tax grew to R101m (2013: R75m), while cash generated by operations
increased to R119m (2013: R56m). The growth in profit is particularly pleasing, considering that over the past three years,
growth in group profit has averaged 50% per annum.
OVERVIEW
The group continues to make significant progress in executing its long- term strategy of improving
its service levels, product quality and operational efficiency whilst investing in the highest quality
transportation fleet and coach depots. During 2014, Cullinan also made good progress in our strategy to diversify into the
financial services sector, thereby further spreading our overall group risk.
As mentioned in our interim report, Cullinan was well placed to take
advantage of the upturn in tourism in 2014. This has been achieved with an excellent
performance by the inbound tour businesses which grew substantially. In addition we believe
that we have increased market share, especially out of China during 2014. The outbound tour
operators and retail travel divisions also performed well and showed decent growth despite a
sluggish South African economy and weaker currency.
The coach charter division, comprising Hylton Ross Tours, Ikapa Charter and Springbok Atlas
Charter had an excellent year. The charter division absorbed the Springbok Atlas charter
business (acquired in 2013) and improved efficiencies and the quality of the fleet and service
levels.
The financial services division continues to grow and delivered a good performance and
appears to be well poised for further growth next year, both internally and from the acquisition of Chester Finance on 1 October
2014.
Lastly, our Marine division has improved its performance during the 2014 year although
margins remain under pressure.
KEY ACHIEVEMENTS OVER THE PAST 12 MONTHS
- All business units performed well over the period, both financially and operationally.
- The company improved the quality and standard of its coach fleet through a R90m capital
expenditure programme and expanded its depots in Cape Town and Johannesburg.
- The roll out of the tour operator travel system is nearly complete showing noticeable
improvements in operating efficiency and improved service levels.
- The Thompsons Africa – China division had an excellent year and is starting to realise
the potential opportunity out of China, although this business has been materially negatively impacted since September 2014
by new South African visa regulations and Ebola perceptions.
- The various measures taken over the 12 months to improve the six travel and tourism
companies acquired last year have shown much improved results, with previously loss making
companies posting a R25m trading profit in their first year within the Cullinan Holdings Group.
- The financial services segment has seen good growth, and the appointment of
Michael Barr as CEO of the Division in March 2014 is bearing fruit, with increased organic growth and the acquisition of Chester
Trade Finance with effect from 1 October 2014.
- Edusport, acquired in September 2013 successfully and profitably fulfilled its role as the
exclusive agent for the Soccer World Cup 2014, and in addition, acquired the business of
Peak Incentives, a specialist travel incentive business in March 2014.
Following the success of the company mentorship program started in 2013 in which 27 staff graduated, a further 47 staff
graduated in 2014. The program will continue in 2015.
PROSPECTS FOR 2015
Our expectation for continued strong demand, a lower oil price and weaker exchange rates in 2015 provides us with some
optimism for the year ahead. This is however tempered by the material negative impact on tourism that the new South African
visa regulations is having on our travel businesses from September 2014, as well as the impact of Ebola from October 2014.
Whilst we anticipate the effect of Ebola to be temporary, we believe the new visa regulations will have a long term damaging
effect on the South African tourism and hospitality industry.
We remain committed to investing in our various business units in 2015 to ensure that they maintain their position as market
leaders in the travel sector, and accordingly we have approved another
year of robust capital expenditure for the year ahead.
We also plan to continue our focus on further development and acquisitions in our financial
services segment during 2015 and to look for acquisition opportunities in the tourism sector.
The intention in the financial sector is to find quality operations in niche segments, either
through purchase or partnerships.
We are confident that the group can continue to achieve above average growth. The
fundamentals of the core businesses remain strong, our new acquisitions in September
2013 in the tourism and travel segments have performed well, while our financial services
division has expanded nicely in 2014. We are therefore well placed for further growth in this
division in 2015.
Finally, we would like to take this opportunity to thank our Chairman, executives, our staff , our
customers and our partners for their support, dedication and professionalism during the 2014
year and for their contribution to a successful year.
On Behalf of the Board
Michael Tollman David Standage
Chief Executive Officer Financial Director
15 December 2014
Company secretary
B Allison
Auditors
Mazars were re-elected as auditors in 2014
Sponsor
Arbor Capital Sponsors (Pty) Limited
(Registration number 2006/033725/07)
Directors
M Tollman, MA Ness*‡, DD Hosking*‡, LA Pampallis, G Tollman*‡, DK Standage,
R Arendse‡, S Nhlumayo‡, A Azoulay‡
*Non-Resident, ‡Non-Executive
Registered office
6 Hood Avenue, Rosebank, 2196
Transfer secretaries
Computershare Investor Services (Pty) 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
Date: 15/12/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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