Wrap Text
Unreviewed condensed consolidated results for the six months ended 31 March 2015
CULLINAN HOLDINGS LIMITED
TOURISM AND LEISURE
(Registration number 1902/001808/06)
(Share code: CUL ISIN: ZAE000013710)
(Share code: CULP ISIN: ZAE000001947)
("the Company" or "the Group")
UNREVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015
GROUP FINANCIAL HIGHLIGHTS
Attributable earnings - R40,1 million
Profit before taxation - R55,2 million
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
Unreviewed Audited
six months year ended
31 March 30 September
2015 2014
R'000 R'000
ASSETS
Non-current assets 374 247 329 788
Property, plant and equipment 217 251 200 939
Investment properties 10 900 10 900
Goodwill 99 864 69 981
Intangible assets 25 807 27 513
Investment in associate companies 3 697 3 697
Investment in joint venture 7 925 7 946
Deferred tax asset 8 803 8 812
Current assets 479 767 524 091
Inventories 52 601 38 684
Accounts receivable 330 166 296 767
Other financial asset – 1 461
Taxation 364 1 122
Cash resources 96 636 186 057
Total assets 854 014 853 879
EQUITY AND LIABILITIES
Ordinary shareholders' equity 415 192 380 284
Preference shareholders' equity 546 546
Non-controlling interest 3 186 4 180
Total shareholders' equity 418 924 385 010
Non-current liabilities 61 976 14 647
Preference shares 500 500
Loans from shareholders 50 000 –
Deferred tax liability 6 269 6 288
Operating lease accrual 5 207 7 859
Current liabilities 373 114 454 222
Operating lease accrual 3 464 3 078
Accounts payable 368 833 446 492
Provisions 622 1 213
Bank overdrafts 152 334
Taxation – 3 089
Preference dividends 43 16
Total equity and liabilities 854 014 853 879
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unreviewed Unreviewed
six months six months
31 March 31 March
2015 2014
R'000 R'000
Revenue 454 536 441 435
Turnover 448 314 435 895
Cost of sales (156 982) (158 421)
Gross profit 291 332 277 474
Net operating expenses (240 185) (222 892)
Operating profit 51 147 54 582
Finance income 6 222 5 540
Finance expenses (2 104) –
Preference dividends paid (25) (26)
Share of (loss)/profit of joint venture (21) 272
Profit before taxation 55 219 60 368
Tax expense (16 019) (16 972)
Profit for the period 39 200 43 396
Other comprehensive income:
Exchange differences on translating
foreign operations 88 149
Total comprehensive income
for the period 39 288 43 545
Profit attributable to:
- equity holders 40 194 43 698
- non-controlling interest (994) (302)
Total comprehensive income
attributable to:
- equity holders 40 282 43 545
- non-controlling interest (994) (302)
Basic earnings per share (cents) 5,02 5,46
Diluted earnings per share (cents) 4,92 5,39
GROUP CONDENSED STATEMENTS OF CHANGES IN EQUITY
Unreviewed Unreviewed
six months six months
31 March 31 March
2015 2014
R'000 R'000
Ordinary share capital
Balance at beginning of period 8 002 7 927
– Issued for business combination – 75
Balance at end of period 8 002 8 002
Share premium
Balance at beginning of period 149 086 140 942
- Arising from issue for business
combination – 8 144
Balance at end of period 149 086 149 086
Share capital reduction
reserve fund
Balance at beginning of period 20 876 20 876
Balance at end of period 20 876 20 876
Capital redemption reserve fund
Balance at beginning of period 4 4
Balance at end of period 4 4
Foreign currency translation reserve
Balance at beginning of period (1 359) (1 665)
- Reserve on translation of
foreign subsidiary 88 149
Balance at end of period (1 271) (1 516)
Revaluation reserve
Balance at beginning of period 870 870
Balance at end of period 870 870
Share-based payment reserve
Balance at beginning of period 6 626 2 225
- Expense for the year 2 628 –
Balance at end of period 9 254 2 225
Accumulated profit/(loss)
Balance at beginning of period 196 179 152 194
Attributable income for period 40 194 43 698
Ordinary dividend paid (8 002) (16 078)
Balance at end of period 228 371 179 814
Ordinary shareholders' equity 415 192 359 361
Non-controlling interest
Balance at beginning of period 4 180 1 804
- Profit attributable to non-controlling
interest (994) (302)
- Dividend paid to non-controlling
interest (558) –
Balance at end of period 3 186 1 502
Preference shareholders' equity
Balance at beginning of period 500 500
Balance at end of period 500 500
Total comprehensive income
Profit for period 39 200 43 396
- Attributable to equity shareholders 40 194 43 698
- Attributable to non-controlling
interest (994) (302)
Translation of foreign subsidiary 88 149
39 288 43 545
GROUP CONDENSED STATEMENT OF CASH FLOWS
Unreviewed Unreviewed
six months six months
31 March 31 March
2015 2014
R'000 R'000
Net cash inflow/(outflow) from
operating activities (77 510) 2 811
Net cash outflow from investing
activities (61 775) (26 521)
Net cash outflow from financing
activities 49 442 –
Net (decrease)/increase in cash
and cash equivalents (89 843) (23 710)
Effect of exchange rate changes on cash
and cash equivalents 604 543
Cash and cash equivalents
at beginning of the period 185 723 205 737
Cash and cash equivalents
at end of the period 96 484 182 570
NOTES
1. Basis of preparation
The unreviewed condensed consolidated results for the six months ended 31 March
2015 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 2015, 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 2014. 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
2015 have been prepared under the supervision of D Standage CA(SA), the financial
director of the group.
2. Notes to the statement of comprehensive income
Unreviewed Unreviewed
six months six months
31 March 31 March
2015 2014
Ordinary shares ('000)
– In issue 800 173 800 173
– Weighted average 800 173 800 173
– Diluted weighted average 816 293 810 714
R'000 R'000
Determination of headline
earnings:
Earnings attributable to
ordinary shareholders 40 194 43 698
Headline earnings 40 194 43 698
Headline earnings
per share (cents) 5,02 5,46
Diluted headline earnings
per share (cents) 4,92 5,39
Dividends per share (cents) 1,00 2,00
Net asset value
per share (cents) 52,35 45,17
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 2014, Cullinan Holdings Limited acquired the trade finance business of Chester
Financial Services (Pty) Ltd.
As stated in prior results, Cullinan have taken a strategic decision to de-risk the business
from its dependence on Travel and Tourism by diversifying into niche financial services, while
at the same time increasing the yield on the cash balances held by the group. The acquisition
of Chester fits with this strategy.
The acquisition included the trade name, business, client base and facilities with related
securities, the staff and intellectual capital and the local book debt. The business will trade
under the name Chester Finance – A Division of Cullinan Holdings Limited.
Goodwill consists of the staff and related intellectual capital, together with the established
client facilities and related security over these facilities. These facilities confer no rights or
contracts on the company but rather, provide the framework within which the company can
transact with clients.
The acquisition was funded out of cash reserves.
The carrying value of the assets as noted below are based upon unaudited amounts and are
expected to approximate the fair value of assets.
The assets acquired as at 1 October 2014 arising from acquisitions are as follows:
Estimated
fair value
R'000
Property, plant and equipment 280
Trade receivables 45 761
Trade and other payables (280)
Net asset value acquired 45 761
Purchase consideration payable out of cash reserves 75 761
Goodwill 30 000
The property, plant and equipment consists of vehicles, fixtures and fittings and computer
software and equipment. The gross amount due under trade receivables is R45,761 million
of which all is expected to be collectible.
R'000
Acquisition costs 2 792
Since the acquisition date, the following amounts have been included in the statement of
comprehensive income for the period:
R'000
Revenue 11 965
Operating profit 2 007
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 2015
Revenue 354 379 31 555 64 111 4 491 454 536
Operating profit 59 578 2 500 6 304 (17 235) 51 147
31 March 2014
Revenue 386 322 24 681 28 496 1 936 441 435
Operating profit 66 495 504 910 (13 327) 54 582
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.
INTRODUCTION
Cullinan Holdings has pleasure in presenting the group's results for the six months
ended 31 March 2015. Despite the material impact from the announcement of
new South African visa regulations, the negative sentiments to visiting Africa as
a result of Ebola and the latest impact on tourism from xenophobia, the group
operating profit (before share options) was R53,8 million for the six-month period
(R54,6 million in the prior year six-month period), this equates to a decline of 1,5%
year on year. An excellent result in the light of the challenges faced by the inbound
tourism divisions over the past six months.
OVERVIEW
Notwithstanding the significant challenges to our inbound and coach transportation
divisions, the fundamentals of the group continue to look good and the rest of the
business has performed very well over the six-month period. Outbound Leisure
Travel continues to produce excellent results, while the Marine businesses
continue to improve.
The group continues to focus on the strategy of improving service, product and
efficiency whilst also looking to diversify into financial services to mitigate the
dependency on Travel and Tourism. This strategy appears to have paid dividends
with the Financial Services segment contributing 12% of the operating income of
the group (up from 1,6% last year).
In October 2014, Cullinan acquired a niche trade finance business, Chester
Finance. This business has settled well within the group and together with Glacier
Finance has started to have a material positive effect on the contribution of
Financial Services to the group results.
Cash balances decreased in the period as a result of the development of the
Financial Services business which saw our loan book increase substantially. This
is in line with our intention to maximise the return on cash resources. Additionally,
the growth in the Glacier Enterprises business as a result the addition of a material
new client meant an increase in stock holdings, while the balance of the decrease
in cash resulted from the acquisition of Chester Finance and R33 million in capital
expenditure incurred in ensuring our coach fleet remains a market leader.
The period under review also saw Cullinan concluding a long-term loan with our
major shareholder in order to finance the increase in working capital. R50 million
of the R100 million facility was drawn down in the period, which is reflected under
shareholders' loans in these results. The interest relating to this loan is reflected
in the statement of comprehensive income and explains the increase in finance
expenses in the period.
KEY ACHIEVEMENTS OVER THE PAST SIX MONTHS:
- The group continued with its fleet upgrade programme with a further R33 million
invested in expanding and upgrading the coach fleet.
- The coach depot in Salt River has been expanded by a further 10 000 m(2) to
allow the Springbok Atlas fleet to be housed together with the rest of our fleet in
Cape Town, which is expected to bring notable benefits in due course.
- The 12 000 m(2) new coach depot in Pomona, Johannesburg is near completion
and is also expected to improve efficiencies and bring significant benefits in
due course.
- The tour operators acquired in 2013 have recently moved into the Cullinan
offices in Cape Town which is expected to improve efficiencies.
- Chester Finance was acquired effective 1 October 2014 as part of the strategy
to diversify into the financial services sector.
- Pentravel continue to expand and recently launched the first of its flagship
"Shops of the future".
REVIEW OF OPERATIONS
Marine and Boating
The Marine and Boating segment improved markedly over the same period last
year. The businesses are well run and with the weaker Rand, we have seen an
upturn in local boat building which has benefited these businesses.
Tourism and Travel
As mentioned above, outbound leisure travel (both retail and wholesale) has
remained strong despite the weaker Rand. Our Corporate travel business remains
healthy although the corporate, meetings, incentives and conferences business
remains a demanding sector.
Inbound Tourism and consequently our coach transport division has suffered in
the period as covered above. The perception of Ebola does seem to have mostly
disappeared but the impact lingers on as this disease was at its peak over the
key booking season. Unfortunately, the self-inflicted consequences of the visa
regulations and birth certificates will remain and the effects remain to be seen.
However, despite this, these businesses remain well run and we are confident we
will see an improvement in the latter half of the year.
Cullinan Financial Services
The Financial Services segment grew markedly in the period, with good growth
from Glacier Enterprises in particular. The loan book increased materially and we
have spent significant amounts of time in improving the business to cater for this
expansion. Chester started more slowly than expected but we expect this also to
improve as the business beds down within Cullinan. This segment contributed 12%
of the group operating profit (last year 1,7%).
PROSPECTS FOR 2015
We are confident about the long-term growth prospects for the group and the ability
to leverage its unique scale of operation within the tourism industry in Southern
Africa, and to continue to build our financial services division. The marine and
outbound travel businesses remains solid and with growth in Financial Services,
we believe the group is well placed for future growth.
From an Inbound tourism perspective, in the short term we expect to continue
to feel the impact of the Ebola scare which has had a more severe impact on
profitability and endured for longer than anticipated. We are also additionally
extremely concerned about the negative impact on South African tourism from the
new South African visa regulations, both on arrivals from China and India and from
the requirements for unabridged birth certificates for all minors, entering or leaving
South Africa, which came into effect from June 2015.
On behalf of the board
M Tollman D Standage
Chief Executive Officer Financial Director
17 June 2015
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 were re-elected as auditors in 2015.
Sponsor
Arbor Capital 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)
Date: 17/06/2015 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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