Wrap Text
Condensed Reviewed Results for the year ended 30 September 2015
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")
CONDENSED REVIEWED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015
GROUP FINANCIAL HIGHLIGHTS
Trading profit R74.9m (Down 19%)
Earnings per share down 17%
Cash generated before working capital changes R107m
Headline earnings per share down 19%
Group condensed statement of financial position
Reviewed as at Audited as at
30 September 30 September
2015 2014
R'000 R'000
ASSETS
Non-current assets 408 202 329 788
Property, plant and equipment 258 813 200 939
Investment properties 10 900 10 900
Goodwill 99 948 69 981
Intangible assets 24 321 27 513
Investment in associate companies 3 732 3 697
Investment in joint ventures 7 054 7 946
Deferred tax asset 3 434 8 812
Current assets 636 802 524 091
Other current assets 528 171 338 034
Cash and cash equivalents 108 631 186 057
Total assets 1 045 004 853 879
EQUITY AND LIABILITIES
Ordinary shareholders' equity 416 590 380 284
Preference shareholders' equity 546 546
Non-controlling interest 3 218 4 180
Total shareholders' equity 420 354 385 010
Non-current liabilities 84 701 14 647
Preference shares 500 500
Shareholders loans 70 000 -
Deferred tax liability 8 881 6 288
Operating lease accrual 5 320 7 859
Current liabilities 539 949 454 222
Other current liabilities 539 949 454 222
Total equity and liabilities 1 045 004 853 879
Group condensed statement of comprehensive income
Reviewed Audited
Year ended Year ended
30 September 30 September
2015 2014
R'000 R'000
Revenue 926 075 941 396
Turnover 920 324 933 415
Net operating expenses (845 346) (840 425)
Trading profit 74 978 92 990
Net finance income 1 883 7 682
Preference dividends paid (55) (55)
Share of (loss) / profit of associates and
joint ventures (857) 275
Profit before taxation 75 949 100 892
Tax expense (19 953) (29 569)
Profit for the year 55 996 71 323
Other comprehensive (loss) / income:
Movement in cash flow hedge (7 856) -
Exchange differences on translating
foreign operations (215) 306
Total comprehensive income for the year 47 925 71 629
Profit / (loss ) attributable to:
equity holders 56 321 67 990
non-controlling interest (325) 3 333
Total comprehensive income / (loss) attributable to:
equity holders 48 250 68 296
non-controlling interest (325) 3 333
Earnings per share (cents) 7.04 8.50
Diluted earnings per share (cents) 6.91 8.33
Group condensed statements of changes in equity
Reviewed Audited
Year ended Year ended
30 September 30 September
2015 2014
R'000 R'000
Ordinary share capital
Balance at beginning of year 8 002 7 927
Issued during year - 75
Balance at end of year 8 002 8 002
Share premium
Balance at beginning of year 149 086 140 942
Premium on issue of shares - 8 144
Balance at end of year 149 086 149 086
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 (1 359) (1 665)
Reserve on translation of foreign subsidiary (215) 306
Balance at end of year (1 574) (1 359)
Revaluation reserve
Balance at beginning and end of year 870 870
Hedging reserve
Balance at beginning of year - -
Movement in cash flow hedge (7 856) -
Balance at end of year (7 856) -
Share-based payment reserve
Balance at beginning of year 6 626 2 225
Expense for the year 4 059 4 401
Balance at end of year 10 685 6 626
Accumulated profit / (loss)
Balance at beginning of year 196 179 152 194
Attributable income for year 56 321 67 990
Ordinary dividend declared (16 003) (24 005)
Balance at end of year 236 497 196 179
Ordinary shareholders' equity 416 590 380 284
Non-controlling interest
Balance at beginning of year 4 180 1 804
Arising from business combination -
(Loss) / profit attributable to non-controlling
interest for year (325) 3 333
Dividend paid to non-controlling interest (637) (957)
Balance at end of year 3 218 4 180
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 / (loss ) for the year 55 996 71 323
- Attributable to equity shareholders 56 321 67 990
- Attributable to non-controlling interest (325) 3 333
Movement in cash flow hedge (7 856) -
Translation of foreign subsidiary (215) 306
47 925 71 629
Group condensed statement of cash flows
Reviewed Audited
Year ended Year ended
30 September 30 September
2015 2014
R'000 R'000
- Cash generated by operations 11 149 119 433
Net cash (outflow) / inflow from
operating activities (27 081) 73 245
Net cash outflow from
investing activities (121 141) (92 591)
Net cash inflow / (outflow) from
financing activities 69 363 (957)
Net decrease in cash
and cash equivalents (78 859) (20 303)
Effect of exchange rate changes on cash
and cash equivalents 1 505 (360)
Cash acquired on acquisition - 649
Cash and cash equivalents
at beginning of the year 185 723 205 737
Cash and cash equivalents
at end of the year 108 369 185 723
Notes
1. Basis of preparation
The condensed reviewed group results have been 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.
The results contain the information required by IAS34 Interim Financial Reporting and
are in compliance with the South African Companies Act (2008)
The accounting policies and methods of computation used in the preparation
of the results are consistent with those used in the annual financial statements for
the year ended 30 September 2014 except as indicated in note 6.
2. Notes to the statement of comprehensive income
Year ended Year ended
30 September 30 September
2015 2014
Ordinary shares ('000) 800 173 800 173
Weighted average number of net shares
in issue 800 173 800 173
Adjusted for effect of future share-based
compensation payments 15 048 16 119
Diluted weighted average number of shares 815 221 816 293
Determination of headline earnings: R'000 R'000
Earnings attributable to ordinary shareholders 56 321 67 990
Losses on disposal
of property, plant and equipment (116) 1 557
Total tax effect 32 (436)
Headline earnings 56 237 69 111
Headline earnings per share (cents) 7.03 8.64
Diluted headline earnings per share (cents) 6.90 8.47
Dividends per share (cents) 2.00 3.00
3. Goodwill Reviewed Audited
Year ended Year ended
30 September 30 September
2015 2014
R'000 R'000
Carrying value at the beginning of the year 69 981 66 758
Arising from business combinations during the year 29 720 3 000
Foreign exchange adjustment 247 223
Carrying value at the end of the year 99 948 69 98
4. BUSINESS COMBINATION
Chester Finance
On 1 October 2014, Cullinan Holdings Limited acquired the trade finance business of Chester Finance (Pty)
Ltd. Goodwill on acquisition arose from intangible assets that do not qualify for recognition seperately from goodwill,
including intellectual capital and the client base, as well as other immaterial intangible assets such as the business trade name.
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 approximate their fair value at the date of acquisition.
The assets acquired as at 1 October 2014 arising from the acquisition are as follows:
Estimated Fair
Value
R'000
Property, Plant & Equipment 273
Trade receivables 45 768
Net asset value acquired 46 041
Purchase consideration paid out of cash reserves 75 761
Goodwill 29 720
The gross amount due under trade and other receivables is R45.768million of which all is expected to be collectible.
The property, plant and equipment consists of vehicles, fixtures and fittings and computer software and equipment.
Since the acquisition date, the following amounts have been included in the statement of comprehensive income for
Cullinan for the year:
R'000
Revenue 25 211
Profit 14 454
Acquisition costs allocated to the statement of comprehensive income 2 792
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 2015
Revenue 740 131 63 256 122 902 (214) 926 075
Trading profit 95 596 3 237 16 325 (40 180) 74 978
Profit before tax 94 739 3 237 18 208 (40 235) 75 949
30 September 2014
Revenue 826 876 48 833 65 959 (272) 941 396
Trading profit 132 045 2 070 5 207 (46 332) 92 990
Profit before tax 132 320 2 070 12 889 (46 387) 100 892
6 Correction of error: Restatement of Revenue, Turnover and cost of sales of
Silverton Travel (Pty) Ltd t/a Edusport Travel
In the 2014 Annual Financial Statements, the commission on tour sales earned by Silverton Travel (Pty) Ltd was reflected as turnover.
This is consistent with the manner in which all of the Cullinan Travel and Tourism businesses treat turnover.
However, it has been determined that in the case of Silverton Travel (Pty) Ltd, the business acts as principal in most transactions
and in order to more correctly reflect this, the decision was made to reflect gross invoiced sales as
turnover in 2015. The adjustment to turnover is offset by an equivalent increase in the cost of sales which is reflected in net
operating expenses.
2014
R'000
Turnover as reported in the 2014 Annual Financial Statements 828 381
Less : Net operating expenses (735 391)
Operating profit 92 990
Restated turnover as disclosed above 933 415
Less : net operating expenses (840 425)
Operating profit 92 990
The restatement has no effect on earnings
7 Cash flow hedge
Forward exchange contracts are classified as Level 2 instruments in the fair value heirarchy. The fair value of the Forward
exchange contract liability at year end amounted to R7.856m
The fair values of forward exchange contracts are calculated using standard market calculation conventions with reference to the
relevant market spot rates, forward foreign exchange and interest rates. The notional principal amounts of the outstanding forward
foreign exchange contracts at year end was R136.31m.
Condensed Reviewed Group Results
These condensed reviewed group results were prepared by D Standage CA (SA), the Financial Director of the Group.
Approval of the condensed reviewed group results
The condensed reviewed group results were approved by the Board of Directors on 23rd December 2015.
Review opinion
The condensed reviewed group results have been reviewed by the group's independent auditor, Mazars. Their unmodified
review opinion is available for inspection at the group's registered office. Their review was conducted in accordance with ISRE 2410
"Review of interim financial information performed by the independent auditor of the entity". The auditor's report does not necessarily
report on all of the information contained in these 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 company's registered office.
Cullinan Holdings is pleased to report on its reviewed group results for 2015.
The 2015 year saw the group's tourism and travel segment (specifically the inbound and tourism coach transport divisions)
materially impacted by a number of factors. These factors include the impact of Ebola, the new South African visa regulations
announced in September 2014 and the impact of xenophobia.
As a result of the factors mentioned above, the group experienced significant decreases in tourism numbers from China, Japan,
Malaysia, Singapore, India and South America. Tourism volumes from the USA and Europe were also negatively impacted for the year.
As a consequence of the above and the decrease in revenue in the tourism and travel segment for the September 2015 year,
the Groups trading profit declined to R74.9m (down 19%) and earnings per share declined by 17%.
We believe that these factors, which impacted tourism numbers during 2015, especially Ebola and the new South African visa
regulations, are behind us and we expect growth to rebound in 2016. While the weaker rand had little impact on increased
tourism numbers in 2015, we anticipate that the effects of this will be positively felt in inbound tourism revenue in 2016.
On the positive side, the rest of the group performed well. The rest of the tourism segment performed strongly under
challenging circumstances. Despite a weak South African economy, reduced corporate and personal budgets and a weak rand,
these other tourism businesses increased their market share and grew their businesses during 2015.
We also saw growth in our Marine business, which delivered improved results.
In October 2014, the group acquired Chester Finance, a niche trade finance provider. We are pleased with the performance of
this business, considering the weak overall economy.
Despite a challenging 2015 year, the group remains strongly cash generative with R107m in cash generated before working
capital changes.
KEY ACHIEVEMENTS OVER THE PAST 12 MONTHS
- The company improved the quality and standard of its coach fleet through the continuing capital expenditure programme, with
R65m invested in fleet in the year to September 2015 on top of the R70m invested in 2014.
- The Depot in Cape Town has been expanded by a further 17 000m2, which has allowed the Springbok Atlas fleet to combine its
depot with that of Hylton Ross with attendant improvements in service, controls and economies of scale. This transport depot
now houses over 120 coaches and vehicles.
- The roll out of the first and major phase of the tour operator travel system is complete. The next phase will be to utilise the
system to transact online with customers and consumers where appropriate.
- Pentravel continued to expand with the addition of three shops and the roll out of two new concept stores. These concept
stores provide customers with an interactive experience when choosing their holiday and have proved to be very well received
and successful.
- Pentravel also continues to expand their web presence, with the expansion of the PenDirect office in Cape Town.
- Edusport successfully operated a program to Rugby World Cup 2015, sending over 1 000 Rugby Fans to the United Kingdom over
September and October 2015.
- The staff mentorship program which was launched in 2013 continues to deliver excellent results, with 40 staff completing the
program in 2015 (up from 23 in 2014).
PROSPECTS FOR 2016
With the effects of Ebola waning and the expectation that the South African visa regulations will soon be amended, we
believe the 2016 prospects are positive. Inbound tourism is still not back at 2014 levels but the lower oil price and weaker
exchange rate provide us with some optimism for the year ahead.
Corporate and leisure travel remains constrained and the weak exchange rate will not assist this segment. Despite these
conditions, we remain confident that our focus on providing excellence in service and quality will see the business continue to
outperform and increase its market share.
Financial Services remain an opportunity for growth and we will continue to look to expand this segment through organic
growth and acquisition.
Despite lower results in 2015, we are confident that the group will see further growth in 2016. The
Fundamentals of the core businesses remain strong and acquisitions made in 2013, 2014 and 2015 have contributed to the
group results.
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 2015 year.
On Behalf of the Board
Michael Tollman David Standage
Chief Executive Officer Financial Director
29th December 2015
Company secretary Auditors
B Allison Mazars were re-elected as auditors in 2015
Sponsor Registered office
Arbor Capital Sponsors (Pty) Limited 6 Hood Avenue, Rosebank, 2196
(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
Transfer secretaries For further information on group activities, please write to:
Computershare Investor Services (Pty) Limited, The Company Secretary, Cullinan Holdings Limited,
Ground Floor, 70 Marshall Street, Johannesburg, 2001 PO Box 41032, Craighall, 2024
(PO Box 61051, Marshalltown, 2107) (Registration number 1902/001808/06)
(Share code: CUL ISIN: ZAE000013710)
(Share code: CULP ISIN: ZAE000001947)
("the Company" or "the Group")
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