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CULLINAN HOLDINGS LIMITED - Unreviewed Condensed Consolidated Results for the Six Months Ended 31 March 2017

Release Date: 06/06/2017 17:35
Code(s): CUL CULP     PDF:  
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Unreviewed Condensed Consolidated Results for the Six Months Ended 31 March 2017

CULLINAN HOLDINGS LIMITED
TOURISM AND LEISURE
(Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)                    

CULLINAN HOLDINGS LIMITED
TOURISM, LEISURE AND FINANCIAL SERVICES
UNREVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2017

GROUP FINANCIAL HIGHLIGHTS

Group condensed statement of financial position
                                                                                     Unreviewed        Audited
                                                                                     six months       Year end 
                                                                                       31 March   30 September
                                                                                           2017           2016
                                                                                          R'000          R'000
ASSETS                                  
Non-current assets                                                                      439 626        409 239
   Property, plant and equipment                                                        282 323        255 428
   Investment properties                                                                 13 350         13 350
   Goodwill                                                                             100 405        100 030
   Intangible assets                                                                     21 181         20 595
   Investment in associates and joint ventures                                           17 633         15 133
   Deferred tax asset                                                                     4 734          4 703
Current assets                                                                          755 143        728 833
   Inventories                                                                           49 009         43 175
   Trade and other receivables                                                          480 522        441 214
   Other financial assets                                                                11 242          3 829
   Current tax receivable                                                                    96         10 921
   Cash and cash equivalents                                                            214 274        229 694
                                  
Total assets                                                                          1 194 769      1 138 072
                                  
EQUITY AND LIABILITIES                                  
Share capital                                                                           162 973        157 634
Reserves                                                                                 38 696         38 411
Retained income                                                                         334 139        290 812
Non-controlling interest                                                                  2 320          3 291
Total shareholders' equity                                                              538 128        490 148
Non-current liabilities                                                                  65 148         66 796
   Loans from shareholders                                                               45 000         45 000
   Other financial liabilities                                                              500            500
   Operating lease liability                                                              7 447          9 073
   Deferred tax liability                                                                12 201         12 223
Current liabilities                                                                     591 493        581 128
   Trade and other payables                                                             577 752        575 507
   Other financial liabilities                                                               38            942
   Operating lease liability                                                                706            857
   Current tax payable                                                                    5 054          1 496
   Provisions                                                                             7 562          1 956
   Dividend payable                                                                          17             17
   Bank overdraft                                                                           364            353
                                  
Total equity and liabilities                                                          1 194 769      1 138 072
                                                                                          
                                 
Group condensed statement of comprehensive income                                 
                                                                                     Unreviewed     Unreviewed
                                                                                     six months     six months
                                                                                       31 March       31 March
                                                                                           2017           2016
                                                                                                      Restated
                                                                                          R'000          R'000
Revenue                                                                                 525 761        470 543
Turnover                                                                                521 068        463 653
Cost of sales                                                                         (168 299)      (169 461)
Gross profit                                                                            352 769        294 192
Other income                                                                             17 365         21 232
Operating expenses                                                                    (301 501)      (254 427)
Trading profit                                                                           68 633         60 997
Investment revenue                                                                        4 693          6 890
Finance expenses                                                                        (2 429)        (3 055)
Income from equity accounted investments                                                  2 499            117
Profit before taxation                                                                   73 396         64 949
Tax expense                                                                            (22 612)       (18 154)
Profit for the period                                                                    50 784         46 795
Other comprehensive income:                                 
Exchange differences on translating                                 
   foreign operations                                                                       172          (421)
Effects of cash flow hedges                                                                   -        (1 416)
Total comprehensive income for the                                                       50 956         44 958
   period                                 
                                 
Profit attributable to:                                 
    equity holders                                                                       51 329         46 447
    non-controlling interest                                                              (545)            348
Total comprehensive income attributable to:                                 
    equity holders                                                                       51 501         44 610
    non-controlling interest                                                              (545)            348
Basic earnings per share (cents)                                                           6.41           5.80
Diluted earnings per share (cents)                                                         6.30           5.70
                               
Group condensed statements of changes in equity                               
                                                                                     Unreviewed     Unreviewed
                                                                                     six months     six months
                                                                                       31 March       31 March
                                                                                           2017           2016
                                                                                          R'000          R'000
Ordinary share capital                               
Balance at beginning of period                                                            8 002          8 002
Issue of shares                                                                              28              -
Balance at end of period                                                                  8 030          8 002
Share premium                               
Balance at beginning of period                                                          149 086        149 086
Issue of shares                                                                           5 311              -
Balance at end of period                                                                154 397        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                                                              881        (1 574)
 - Reserve on translation of foreign subsidiary                                             172          (421)
Balance at end of period                                                                  1 053        (1 995)
Revaluation reserve                                
Balance at beginning and end of period                                                      626            870
Share-based payment reserve                               
Balance at beginning of period                                                           16 024         10 685
 - Share options exercised                                                              (5 058)              -
 - Expense for the period                                                                 5 171          3 038
Balance at end of period                                                                 16 137         13 723
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                                                          290 812        236 497
Attributable profit for period                                                           51 329         46 447
Ordinary dividend paid                                                                  (8 002)        (8 002)
Balance at end of period                                                                334 139        274 942
Non-controlling interest                               
Balance at beginning of period                                                            3 291          3 218
 - Profit attributable to non-controlling interest                                        (545)            348
 - Dividend paid to non-controlling interest                                              (426)          (732)
Balance at end of period                                                                  2 320          2 834
                               
Group condensed statement of cash flows                               
                                                                                     Unreviewed     Unreviewed
                                                                                     six months     six months
                                                                                       31 March       31 March
                                                                                           2017           2016
                                                                                          R'000          R'000
Trading profit                                                                           68 633         60 997
   Depreciation and amortisation                                                         21 059         20 986
   Other non-cash items                                                                   2 700          9 195
Cash generated before working capital changes                                            92 392         91 178
   (Increase)/decrease in inventories                                                   (5 834)          5 048
   (Increase)/decrease in receivables                                                  (39 308)         63 683
   Increase/(decrease) in payables                                                        2 229       (58 112)
Cash generated by operations                                                             49 479        101 797
   Dividends paid                                                                       (8 002)        (8 002)
   Net finance charges                                                                    2 264          3 835
   Taxation paid                                                                        (8 229)        (8 763)
Net cash inflow from operating activities                                                35 512         88 867
   Additions to property, plant and equipment                                          (48 528)       (28 306)
Net cash outflow from investing activities                                             (48 528)       (28 306)
Net cash (outflow) from financing activities                                              (145)          (732)
Net (decrease)/increase in cash                               
   and cash equivalents                                                                (13 161)         59 829
Effect of exchange rate changes on cash                               
   and cash equivalents                                                                 (2 270)        (1 077)
Cash and cash equivalents                               
   at beginning of the period                                                           229 341        108 369
Cash and cash equivalents                                
   at end of the period                                                                 213 910        167 121

Notes
1. Basis of preparation
   The unreviewed condensed consolidated results for the six months ended 31 March 2017 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
   reviewed results for the six months ended 31 March 2017, 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 2016. 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 2017 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
                                                                                           2017          2016
   Ordinary shares ('000)    
   - In issue                                                                           803 033       800 173
   - Weighted average                                                                   800 650       800 173
   - Diluted weighted average                                                           814 245       815 221
    
                                                                                          R'000         R'000
   Determination of headline earnings    
   Earnings attributable to ordinary shareholders                                        51 329        46 447
   Headline earnings                                                                     51 329        46 447
   Headline earnings per share (cents)                                                     6.39          5.80
   Diluted headline earnings per share (cents)                                             6.30          5.70
   Dividends per share (cents)                                                             1.00          1.00
   Net asset value per share (cents)                                                      67.21         57.44
    
3. Shares issued    
   During the period, 2 810 000 shares were issued for options exercised.


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 2017
                    Revenue                  459 858        34 480        21 154         10 269       525 761
                    Trading profit            91 629         2 861         2 023       (27 880)        68 633
   31 March 2016
                    Revenue (Restated)       361 788        35 101        66 459          7 195       470 543
                    Trading profit            74 092         2 720         2 834       (18 649)        60 997

   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 2017
   Investment property                                                                                 13 350
   Foreign exchange contracts                                                            11 204
   31 March 2016
   Investment property                                                                                 10 900
   Foreign exchange contracts                                                          (11 756)

   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 2016. Revaluations were performed by independent valuers, 
   Penny Brothers Brokers & Valuers (Pty) Limited, Holthuizen and Chengiah Property Valuers, H Tryhou Property Consultants 
   and 3600 Properties. 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.

6. Comparatives
   In prior years, foreign exchange gains were included in miscellaneous other revenue as travel costings are very closely integrated 
   with foreign exchange rates used. However the nature of these exchange gains/losses have changed and are no longer closely 
   associated with costings. We therefore believe that these gains will be more correctly reflected within other income and have been 
   classified retrospectively.

OVERVIEW
We are satisfied with our group performance for the six months to 31 March 2017, which saw group revenue increase by 12% to R526m 
(2016: R471m) and group profit before tax increase by 13% to R73.3m (2016:R64.9m). The group generated R49m (2016: R102m) in cash from 
operations and ended the six period with R214m in cash resources (2016: R167m). Cash generated was down when compared to March 2016 - 
primarily due to the increase in debtors as a result of increased sales in the Inbound business.

As mentioned above, the six month period to March 2017 has seen a good performance from our inbound tourism businesses after a poor 
2016 year. The performance of the coach transport and touring business units is closely aligned with inbound tourism and also performed 
well.

The marine division performed acceptably,whilst our local travel businesses generally held their own, with areas showing some weakness 
during the period. The weakness was as a result of a weaker rand and a more challenging local South African economy.

We are pleased to report that the trade finance business is holding up despite a challenging local economy, and we remain confident that 
we can continue to grow the financial services division.

The group gearing position remains relatively low. The R100m loan facility concluded with The Travel Corporation in 2014 remains in place. 
The group currently utilises R45m of the facility which was established to provide backup funding for the financial services division.

As mentioned in our year end report, the company continues to re-invest in improvements to the business. We continue to improve and expand 
our coach fleet and depots, with R48m in capital expenditure invested in the 6 month period to March 2017, and a further R45m planned to 
September 2017. This will assist in ensuring that the brand leadership position of our coach fleet is maintained.

Looking at our non-financial measures of performance, we are pleased to report that 28 staff have begun our internal mentorship programme 
for the 2017 year (169 staff have graduated since the program was started). The mentorship programme is aimed at upskilling and developing 
employees in our group and has significantly contributed towards personal growth and career advancement thus far.

The group is a member of The Treadright Foundation, established by The Travel Corporation Ltd to assist in achieving sustainable tourism. 
The Treadright Foundation is a non-profit foundation which aims to encourage sustainabletourism through conservation, leadership and 
support for communities. It has undertaken over 40 projects globally, including projects focused on preventing the destruction of 
endangered species, such as rhino, sharks and lions. The Foundation also supports a number of community projects amongst its various other 
projects.

Future prospects
We remain optimistic for the 2017 year, despite a challenging environment with increased uncertainty in the world. Forward bookings are 
positive at present and the inbound tourism market is expected to remain upbeat for the balance of 2017.

Aside from investing in our business to continue the organic growth, we will continue to look for opportunities and acquisitions in the 
tourism and financial services sectors, whilst maintaining our focus on delivering exceptional service and value to our customers.

The group has declared an interim dividend of 1c per share. We would like to take this opportunity to thank our board, executives, our 
staff and our partners for their support and for a great effort and contribution during the first half of the 2017 year.

On Behalf of the Board
G Tollman                                          M Tollman                                          D Standage
Chairman                                           Chief Executive Officer                            Financial Director
6 June 2017

Auditors
Mazars were re-elected as auditors in 2017.

Sponsor
Arbor Capital Sponsors (Pty) Limited
(Registration number 2006/033725/07)

Directors
Executive: M TOLLMAN, LA PAMPALLIS, DK STANDAGE, L TOLLMAN
Non-Executive: G TOLLMAN (Chairman) #, DD HOSKING #, R ARENDSE, M BURTON, A MENDIRATTA #
# Non-resident

Transfer secretaries
Computershare Investor Services (Pty) Limited,                                                        Company secretary
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196                                                   B Allison
(PO Box 61051, Marshalltown, 2107)                                                                   
                
For further information on group activities, please write to:                                         Registered office
The Company Secretary, Cullinan Holdings Limited,                                                     6 Hood Avenue, Rosebank, 2196
PO Box 41032, Craighall, 2024                                                                         
(Registration number 1902/001808/06)                
(CUL ISIN: ZAE000013710)                
(CULP ISIN: ZAE000001947)                                                                            
                                                                                                      



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