Wrap Text
Unreviewed Condensed Consolidated Results for the Six Months Ended 31 March 2016
CULLINAN HOLDINGS LIMITED
TOURISM AND LEISURE
UNREVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016
GROUP FINANCIAL HIGHLIGHTS
Revenue - up 8%
Trading profit - up 19%
Cash and cash equivalents - increased to R167m
Group condensed statement of financial position
Unreviewed Audited
six months Year end 30
31 March September
2016 2015
R'000 R'000
ASSETS
Non-current assets 416 697 408 202
Property, plant and equipment 267 877 258 813
Investment properties 10 900 10 900
Goodwill 100 290 99 948
Intangible assets 22 579 24 321
Investment in joint venture 7 014 7 054
Investment in associate companies 3 752 3 732
Deferred tax asset 4 285 3 434
Current assets 619 013 636 802
Inventories 55 378 60 426
Trade and other receivables 393 964 457 647
Current tax receivable 2 317 10 098
Cash and cash equivalents 167 354 108 631
Total assets 1 035 710 1 045 004
EQUITY AND LIABILITIES
Share capital 157 634 157 634
Reserves 24 206 23 005
Retained income 274 942 236 497
Non-controlling interest 2 834 3 218
Total shareholders' equity 459 616 420 354
Non-current liabilities 83 090 84 701
Loans from shareholders 70 000 70 000
Other financial liabilities 500 500
Operating lease liability 3 730 5 320
Deferred tax liability 8 860 8 881
Current liabilities 493 004 539 949
Trade and other payables 467 570 525 682
Other financial liabilities 11 756 2 336
Operating lease liability 2 048 1 729
Current tax payable 1 821 365
Provisions 1 556 1 556
Dividend payable 8 020 8 019
Bank overdraft 233 262
Total equity and liabilities 1 035 710 1 045 004
- -
Group condensed statement of comprehensive income
Unreviewed Unreviewed
six months six months
31 March 31 March
2016 2015
R'000 R'000
Revenue 491 775 454 536
Turnover 484 885 448 314
Cost of sales (169 461) (156 982)
Gross profit 315 424 291 332
Operating expenses (254 427) (240 185)
Trading profit 60 997 51 147
Investment revenue 6 890 6 222
Finance expenses (3 055) (2 129)
Income from equity accounted investment 117 (21)
Profit before taxation 64 949 55 219
Tax expense (18 154) (16 019)
Profit for the period 46 795 39 200
Other comprehensive income:
Exchange differences on translating
foreign operations (421) 88
Effects of cash flow hedges (1 416) -
Total comprehensive income for the 44 958 39 288
period
Profit attributable to:
equity holders 46 447 40 194
non-controlling interest 348 (994)
Total comprehensive income attributable to:
equity holders 44 610 40 282
non-controlling interest 348 (994)
Basic earnings per share (cents) 5.80 5.02
Diluted earnings per share (cents) 5.70 4.92
Group condensed statements of changes in equity
Unreviewed Unreviewed
six months six months
31 March 31 March
2016 2015
R'000 R'000
Ordinary share capital
Balance at beginning and end of period 8 002 8 002
Share premium
Balance at beginning and end of period 149 086 149 086
Share capital reduction reserve fund
Balance at beginning and end of period 20 876 20 876
Capital redemption reserve fund
Balance at beginning and end of period 4 4
Foreign currency translation reserve
Balance at beginning of period (1 574) (1 359)
- Reserve on translation of foreign subsidiary (421) 88
Balance at end of period (1 995) (1 271)
Revaluation reserve
Balance at beginning and end of period 870 870
Share-based payment reserve
Balance at beginning of period 10 685 6 626
- Expense for the period 3 038 2 628
Balance at end of period 13 723 9 254
Hedging reserve
Balance at beginning of period (7 856) -
- Expense for the period (1 416) -
Balance at end of period (9 272) -
Retained income
Balance at beginning of period 236 497 196 179
Attributable profit for period 46 447 40 194
Ordinary dividend paid (8 002) (8 002)
Balance at end of period 274 942 228 371
Non-controlling interest
Balance at beginning of period 3 218 4 180
- Profit attributable to non-controlling interest 348 (994)
- Dividend paid to non-controlling interest (732) (558)
Balance at end of period 2 834 3 186
Group condensed statement of cash flows
Unreviewed Unreviewed
six months six months
31 March 31 March
2016 2015
R'000 R'000
Net cash inflow / (outflow) from
operating activities 88 867 (77 510)
Net cash outflow from
investing activities (28 306) (61 775)
Net cash (outflow) / inflow from
financing activities (732) 49 442
Net (decrease) / increase in cash
and cash equivalents 59 829 (89 843)
Effect of exchange rate changes on cash
and cash equivalents (1 077) 604
Cash and cash equivalents
at beginning of the period 108 369 185 723
Cash and cash equivalents
at end of the period 167 121 96 484
Notes
1. Basis of preparation
The unreviewed condensed consolidated results for the six months ended 31 March 2016 have
been prepared in accordance with and contain 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 ("JSE") 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
unreviewed results for the six months ended 31 March 2016, 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 2015. The unreviewed results are
presented in Rands, which is Cullinan Holdings Limited's presentation currency.
The unreviewed condensed consolidated interim results for the six months ended 31 March 2016
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
2016 2015
Ordinary shares ('000)
- In issue 800 173 800 173
- Weighted average 800 173 800 173
- Diluted weighted average 815 221 816 293
R'000 R'000
Determination of headline earnings
Earnings attributable to ordinary shareholders 46 447 40 194
Adjustments - -
Headline earnings 46 447 40 194
Headline earnings per share (cents) 5.80 5.02
Diluted headline earnings per share (cents) 5.70 4.92
Dividends per share (cents) 1.00 1.00
Net asset value per share (cents) 57.44 52.53
3. JSE
The directors of the company ensured compliance with the JSE Listings Requirements during the
period under review.
4. Segmental reporting
Travel and Marine and Financial Corporate
Tourism Boating Services Services Total
R'000 R'000 R'000 R'000 R'000
31 March 2016
Revenue 383 016 35 021 65 915 7 823 491 775
Trading profit 74 092 2 720 2 834 (18 649) 60 997
31 March 2015
Revenue 354 379 31 555 64 111 4 491 454 536
Trading profit 59 578 2 500 6 304 (17 235) 51 147
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.
5. Fair value information
Level 1 Level 2 Level 3
R'000 R'000 R'000
31 March 2016
Investment property 10 900
Foreign exchange contracts (11 756)
31 March 2015
Investment property 10 900
Fair value hierarchy
Level 1 - Quoted unadjusted prices in active markets for identical assets or liabilities that the group can access
at measurement date
Level 2 - Inputs other than quoted prices included in level 1 that are observable for the asset or liability
either directly or indirectly
Level 3 - Unobservable inputs for the asset or liability
There have been no transfers between the levels.
Details of valuation
Investment property
The effective date of the revaluations was 30 September 2013 and 30 September 2014. Revaluations were
performed by independent valuers, Penny Brothers Brokers & Valuers (Pty) Limited, Holthuizen and Chengiah
Property Valuers and H Tryhou Property Consultants. None of these independent valuers are connected to
the group and have recent experience in location and category of the investment properties being valued.
In determining the valuation, the valuator referred to current market comparable sales of similar properties
in similar locations. No further valuations are deemed necessary during the year as the property values in
the areas have remained relatively stable.
The valuations were based on open market value for existing use.
Foreign exchange contracts
Forward foreign exchange contracts included in financial liabilities at fair value through profit and loss are
measured to fair value using quoted market prices (mark to market) provided by the Standard Bank of
South Africa Limited.
INTRODUCTION
Cullinan Holdings has pleasure in presenting the group's results for the six months ended 31 March 2016.
The end of 2015 saw a number of positive changes for inbound tourism to South Africa. These include the
following:
- The end of the Ebola epidemic which had severely affected perceptions about the destination;
- Positive changes implemented to the SA Visa regulations for Chinese visitors to South Africa (the result has
seen a substantial turnaround in this market in 2016);
- The positive impact for inbound tourists of a weaker rand;
- South Africa is seen as a safe destination to visit whilst security issues in Europe and competitor destinations
such as Egypt, Tunisia and to an extent Turkey, continue to be affected;
- Lastly, we have recently been informed by the department of Home Affairs that changes to regulations are
under way and as a result, it is expected that unabridged birth certificates should not be required for foreign
visitors from approximately September 2016. We expect that clarity regarding this issue will greatly assist to
increase family tourism to South Africa.
As a result of the abovementioned changes since late 2015, we have seen a significant recovery in inbound
tourism. This has boosted the Travel and Tourism segment of the business while the rest of the group delivered
solid performances.
Consequently the group trading profit before share option expenses increased by 19% to R64m (prior period
R53.8m) while profit before tax increased by 17% to R65m (prior period R55m).
Cash on hand increased to R167m (R96m at March 2015).
An interim dividend of 1c per share has been declared.
We remain optimistic about results for the second half of the year.
OVERVIEW
We are very pleased with the performance of the group. All segments contributed to what has been a very good
result for the six months to March 2016. While the period has been boosted by the recovery of the inbound and
coach and touring business units, what is also pleasing is that the various outbound travel businesses and the
financial services segment have remained resilient. This despite challenges faced in the local economy from
inflation, increased interest rates, lack of growth in the economy and the devaluation of the Rand which makes
outbound travel less affordable.
The statement of financial position continues to look healthy. The three-year capital program, started in 2013 to
renew, expand and improve our fleet, ended in 2015. Although the group still incurred R28m in outflows from
investing activities (primarily capital expenditure on the coach fleet) this was still well down on prior periods. This
reflects our view that the coach fleet is one of the most modern and well equipped in South Africa and the bulk of
this capital expenditure was incurred to maintain this position.
This reduced capital expenditure, together with the upturn in the cash generative travel businesses, has resulted
in a large increase in cash balances at the end of the period. The growth in our loan book in the financial services
segment has been steady and we will continue to look to grow this organically. Lastly, there were some material
decreases in working capital in both accounts receivable and accounts payable. This reflects the unusually high
deposits received and paid at 30 September 2015 for the Rugby World Cup 2015, which ended in October 2015.
Notwithstanding there are some significant challenges in the local economy, the fundamentals of the group look
positive. The investment in fleet, coach depots, the on-going focus on improvement in service and quality over the
past few years has the group well placed to perform well if external circumstances remain stable.
KEY ACHIEVEMENTS OVER THE PAST 6 MONTHS
- The combined coach depot in Salt River, Cape Town has been expanded by a further 10 000m(2) and now
measures 23 000m(2). This now means that the combined fleet comprising 149 coaches and vehicles from
Springbok Atlas, Hylton Ross and Ikapa are now housed together, bringing marked efficiencies to the
business.
- The 12,000m(2) new coach depot in Pomona, Johannesburg is complete and as above, this means that the
combined fleet in that region is now housed in one depot.
- With the most recent capital expenditure, the coach fleet has an average age of less than four years.
- Pentravel continue to expand and recently launched three new shops in the last 12 months.
REVIEW OF OPERATIONS
Marine and Boating
The Marine and Boating segment improved 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. The leisure
side of the business, primarily within Manex Marine, has also seen an improvement with the Aqualung diving
brand performing well.
Tourism and Travel
As mentioned in the overview, the inbound tourism market has recovered from the effects of Ebola. There has also
been an easing in the visa challenges for China and India, although these have not been fully resolved.
The effect of the above, together with the rapid devaluation in the Rand and security issues in Europe, North Africa
and Turkey have contributed to making Southern Africa an increasingly attractive option for international tourists
with the resultant improved performance from the inbound operators (Thompsons Africa, Springbok Atlas Touring
and Planet Africa Tours).
The effect of increased inbound passenger volumes on the coach operations is significant, with the result the
coach businesses have performed extremely well. As mentioned in the overview, we have invested a large amount
in these businesses over the past three years so we are very pleased to see that we are seeing the returns we
expect.
The same weakening of the Rand that is beneficial to inbound tourism has an opposite effect on the travel
businesses selling outbound travel. This, together with the challenges in the local economy, has meant that these
businesses have traded in a tough environment. Notwithstanding that, they have maintained their performance
and continue to work at providing excellent service and quality.
Cullinan Financial Services
The same negative economic factors mentioned above have also impacted on the Financial Services segment.
Economic growth in South Africa is desultory and this provides a tough environment for a business that is focused
on assisting businesses to grow.
What is pleasing however is that the loan book for Chester Finance, which was acquired in October 2014 has
grown steadily and, after 18 months, the business is now well integrated into the Cullinan group and provides a
good base to expand.
PROSPECTS FOR 2016
It is likely that the economic situation in South Africa will remain constrained for the short to medium term. This
means that businesses which are dependent upon the local economy will face challenges. Conversely, there are a
large number of positives when looking at the inbound tourism and coach businesses and even the marine
businesses which benefit from a weaker Rand.
However, notwithstanding the mixed outlook as mentioned above, we are confident about the long-term growth
prospects for the travel and tourism segment. This segment has a unique scale of operation in Southern Africa, with
some of the most prominent travel and tourism brands domestically and in the international travel industry.
The marine and outbound travel businesses remain solid and well run and we expect them to continue to
contribute nicely to the group.
The intention is to grow the Financial Services segment organically through investment in business development.
In addition, we continue to look for acquisitions in this area that will meet our investment criteria and fit within the
Cullinan group.
In conclusion, we believe that the group is diverse enough to manage the challenges in the economy in the
long-term. In the shorter term, the next six months look positive.
On Behalf of the Board
M Tollman D Standage
Chief Executive Officer Financial Director
6 June 2016
Auditors Company Secretary
Mazars were re-elected as auditors in 2016. B Allison
Sponsor
Arbor Capital Sponsors (Pty) Limited Registered Office
(Registration number 2006/033725/07) 6 Hood Avenue, Rosebank, 2196
Directors
M Tollman, DD Hosking *‡, LA Pampallis, G Tollman*‡, DK Standage, R Arendse §, L Tollman
* Non-resident, ‡ Non-Executive, § Independent Non-Executive
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
(Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)
Date: 06/06/2016 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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