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Condensed Audited Group Results for the year ended 30 September 2017
CULLINAN HOLDINGS LIMITED
(Registration number 1902/001808/06)
(CUL ISIN: ZAE000013710)
(CULP ISIN: ZAE000001947)
TOURISM, LEISURE AND FINANCIAL SERVICES
CONDENSED AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2017
GROUP FINANCIAL HIGHLIGHTS
Profit for the period up 29% to R92m
Cash balances increased to R247m at year-end
R112m invested in capital expenditure in the year
Group condensed statement of profit or loss and other comprehensive income
Audited Audited
Year end Year end
30 September 30 September
2017 2016
R'000 R'000
Revenue 1 014 435 1 040 674
Turnover 1 005 518 1 033 738
Cost of sales (306 904) (400 602)
Gross profit 698 614 633 136
Other operating gains 30 560 35 798
Other operating expenses (612 224) (569 328)
Trading profit 116 950 99 606
Investment revenue 8 917 6 936
Finance expenses (4 283) (5 991)
Fair value adjustments - 710
Income from equity accounted investments 6 205 2 129
Profit before taxation 127 789 103 390
Tax expense (35 840) (32 267)
Profit for the period 91 949 71 123
Other comprehensive income net of taxation:
Gains and losses on property revaluation - (244)
Exchange differences on translating
foreign operations (494) 2 455
Effects of cash flow hedges - 7 856
Total comprehensive income for the 91 455 81 190
period
Profit attributable to:
- owners of the parent 92 383 70 318
- non-controlling interest (434) 805
Total comprehensive income attributable to:
- owners of the parent 91 889 80 385
- non-controlling interest (434) 805
Basic earnings per share (cents) 11.52 8.79
Diluted earnings per share (cents) 11.37 8.64
Group condensed statement of financial position
Audited Audited
Year end Year end
30 September 30 September
2017 2016
R'000 R'000
ASSETS
Non-current assets 480 385 409 239
Property, plant and equipment 320 498 255 428
Investment properties 13 350 13 350
Goodwill 97 402 100 030
Intangible assets 21 043 20 595
Investment in joint venture 17 997 11 981
Investment in associate companies 3 124 3 152
Deferred tax asset 6 971 4 703
Current assets 821 665 728 833
Other current assets 574 688 499 139
Cash and cash equivalents 246 977 229 694
Total assets 1 302 050 1 138 072
EQUITY AND LIABILITIES
Equity attributable to equity holders of parent
Share capital 185 288 157 634
Reserves 15 927 38 411
Retained income 366 852 290 812
568 067 486 857
Non-controlling interest 972 3 291
Total shareholders' equity 569 039 490 148
Non-current liabilities 73 360 66 796
Loans from shareholders 45 000 45 000
Other financial liabilities 500 500
Operating lease liability 10 888 9 073
Deferred tax liability 16 972 12 223
Current liabilities 659 651 581 128
Other current liabilities 659 651 581 128
Total equity and liabilities 1 302 050 1 138 072
Group condensed statement of changes in equity
Audited Audited
Year end Year end
30 September 30 September
2017 2016
R'000 R'000
Share capital
Balance at beginning of period 8 548 8 548
- Share options exercised 35 -
Balance at end of period 8 583 8 548
Share premium
Balance at beginning of period 149 086 149 086
- Share options exercised 6 739 -
- Transfer from reserves 20 880 -
Balance at end of period 176 705 149 086
Share capital reduction reserve fund
Balance at beginning of period 20 876 20 876
- Transfer to share premium (20 876) -
Balance at end of period - 20 876
Capital redemption reserve fund
Balance at beginning and end of period 4 4
- Transfer to share premium (4) -
Balance at end of period - 4
Foreign currency translation reserve
Balance at beginning of period 881 (1 574)
- Reserve on translation of foreign subsidiary (494) 2 455
Balance at end of period 387 881
Revaluation reserve
Balance at beginning of period 626 870
- Movement for the period - (244)
Balance at end of period 626 626
Share-based payment reserve
Balance at beginning of period 16 024 10 685
- Expense for the period 5 307 5 339
- Share options exercised (6 417) -
Balance at end of period 14 914 16 024
Hedging reserve
Balance at beginning of period - (7 856)
- Movement for the period - 7 856
Balance at end of period - -
Retained income
Balance at beginning of period 290 812 236 497
- Attributable profit for period 92 383 70 318
- Ordinary dividend paid (16 035) (16 003)
- Changes in ownership interest (308) -
Balance at end of period 366 852 290 812
Non-controlling interest
Balance at beginning of period 3 291 3 218
- Profit attributable to non-controlling interest (434) 805
- Dividend paid to non-controlling interest (577) (732)
- Changes in ownership interest (1 308) -
Balance at end of period 972 3 291
Group condensed statement of cash flows
Audited Audited
Year end Year end
30 September 30 September
2017 2016
R'000 R'000
Trading profit 116 950 99 606
Depreciation and amortisation 41 624 41 955
Other non-cash items 27 211 11 753
Cash generated before working capital changes 185 785 153 314
(Increase)/decrease in inventories 7 568 17 251
(Increase)/decrease in receivables (102 025) 16 433
Increase/(decrease) in payables 74 528 49 825
Cash generated by operations 165 856 236 823
Dividends paid (16 035) (24 005)
Net finance charges 4 634 945
Taxation paid (27 993) (29 887)
Net cash inflow from operating activities 126 462 183 876
Additions to property, plant and equipment and software (112 067) (41 714)
Other investing activities 4 378 4 320
Net cash outflow from investing activities (107 689) (37 394)
Repayment of shareholders' loan - (25 000)
Other financing activities (1 836) (732)
Net cash (outflow) from financing activities (1 836) (25 732)
Net increase in cash
and cash equivalents 16 937 120 750
Effect of exchange rate changes on cash
and cash equivalents 294 222
Cash and cash equivalents
at beginning of the period 229 341 108 369
Cash and cash equivalents
at end of the period 246 572 229 341
Notes
1. Basis of preparation
The condensed group financial statement extracts 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 IAS 34 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 2016 and in terms of International Financial Reporting Standards.
2. Notes to the statement of profit or loss and other comprehensive income
Audited Audited
Year end Year end
30 September 30 September
2017 2016
R'000 R'000
Ordinary shares ('000)
- In issue 803 738 800 173
- Weighted average 802 046 800 173
- Diluted weighted average 812 738 814 245
Determination of headline earnings
Earnings attributable to ordinary shareholders 92 383 70 318
Losses on disposal of property, plant and equipment 194 573
Tax effect (54) (160)
Revaluations of investment property - (710)
Tax effect - 159
Change in capital gains tax rate - 331
Goodwill impairment 2 599 -
Headline earnings 95 122 70 511
Headline earnings per share (cents) 11.86 8.81
Diluted headline earnings per share (cents) 11.70 8.66
Dividends per share (cents) 2.00 2.00
3. 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 2017
Revenue 879 015 76 752 53 914 4 754 1 014 435
Profit before taxation 166 574 5 730 19 681 (64 196) 127 789
30 September 2016
Revenue 852 893 69 663 115 481 2 637 1 040 674
Profit before taxation 132 044 5 424 14 470 (48 548) 103 390
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.
either directly or indirectly.
Annual financial statements
These group condensed financial statement extracts should be read in conjunction with the audited 2017 annual
financial statements issued on 15 December 2017. 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 which has been extracted from
audited financial information and 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 14 December 2017.
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 11:00 on 2 February 2018 to transact the business as stated in the annual general meeting
notice forming part of the integrated annual report.
OVERVIEW
We are pleased to report a strong year of growth. This is particularly pleasing as it follows a year of significant
growth in 2016. Profit before tax increased by 24% to R128m (2016: R103m) and the group ended the year with
R247m in cash resources (2016: R229m) after capital expenditure of R112m.
2017 saw a particularly strong performance in our inbound tourism and transport businesses. These divisions grew
substantially during the year and we were particularly pleased with their overall performance. With a year of
substantial growth, these businesses performed well within our service benchmarks. Our focus on service and
quality of our transport fleet continues from the substantial investment in our fleet and coach facilities over the
past four years.
We are also very pleased to confirm an improved performance from our local leisure and corporate travel
agencies and outbound tourism businesses in 2017, despite a weakened local South African economy. The
Marine business units and Trade Finance business units also operated in a challenging economic environment and
have shown improved year on year results in 2017.
Whilst revenue increased in most business units, our sporting division saw a revenue decline in 2017 as there were
no major sporting events in the period. The sporting events division acts as principal with respect to recognition
of revenue. The travel businesses recognise revenue based upon commission or fees earned and increased
revenue by 20% when compared to 2016. The result of the above was a small decrease in overall group revenue
to R1.014b (2016: R1.040b). This has also had an effect on working capital, which shows an increase in both trade
receivables and payables.
The group gearing position remains low, which provides an opportunity to access debt should the group require.
The R100m loan facility concluded with The Travel Corporation in 2014 remains in place. The group currently utilises
R45m of the facility (2016: R45m) . This facility was established to provide back-up funding for the Financial Services Division
and the Travel Corporation have expressed their committment to increase this facility as required. Cullinan have also allocated
a substantial portion of the group's cash resources to increase the trade and other finance loan book.The Financial Services division
is also actively looking for acquisitions as a bolt on to the current business units.
Looking at non-financial measures of performance, we are pleased to report that we continue to run our internal mentorship
programme with a further 21 staff going through the programme in 2017 (148 graduates have graduated since the programme was started).
The mentorship programme is aimed at up skilling and developing employees in our group and has significantly contributed towards
their personal growth and advancement. We are planning further outsourced up skilling and training in 2018 in addition to our
mentorship programme.
On the 22nd November 2017, the board received notification that its holding company, Alpine Asset Management,
had made an offer to acquire 100% of the issued share capital not already held by it. Should the offer be accepted,
Cullinan would become a wholly-owned subsidiary of the offeror and the Listing on the JSE would be terminated.
Details of this offer can be found on SENS, with the notice released on 24 November 2017 and published in the
press on 27 November 2017.
REVIEW OF OPERATIONS MARINE AND BOATING SEGMENT
The businesses have traded profitably, with the gradual improvement in boat demand worldwide and weakened
Rand making South African boatbuilding globally more competitive.
TRAVEL AND TOURISM SEGMENT
Retail Travel
In general, although consumer spending remains under pressure in South Africa in 2016, our retail businesses
have performed satisfactorily, particularly in the second half of the year. The travel industry has also faced
challenges in recruiting and retaining good staff. In 2017, we focused on this area and we are very pleased to see
that the steps taken are showing tangible results through a combination of energised recruitment and further
increased investment in training.
Our Corporate Travel business had another successful year, and although operating in a very competitive space,
the relentless focus on the customer service continues to allow us to increase our market share.
Outbound Tour Operators
The various divisions within the outbound business showed strong performance during the year considering the
tough trading environment and the impact of the devaluation in buying power of the Rand.
Inbound Tour Operators
The 2016 year saw a recovery in Inbound Tourism as reported last year and this rebound has continued through
2017. The weaker Rand and uncertainty in many competing tourism destinations around the world for reasons
related to terrorism or political uncertainty assisted the recovery. The result of this has been substantial real
growth in inbound tourism numbers and sales.
Coaching and Touring
The Cullinan coach business is primarily leisure tourism focused so the improvement in inbound tourism volumes
has had a very positive effect on the business. Our investment in this business over the past 4 years has meant
that our modern coach fleet, excellent coach depots and professional team of management and staff enabled us
to take advantage of this upturn and provide good results. Our intention is to continue to develop this segment of
our business and hence the board has approved a robust capital expenditure programme for 2018 with a further
R80m capital expenditure approved. Our objective is to ensure we continue to retain the leading and newest fleet
in the country while continuing growing the fleet in strategic areas of opportunity.
CULLINAN FINANCIAL SERVICES SEGMENT
Our Financial services businesses typically provide trade finance to fund growth. Consequently, the economic
climate has proven challenging in 2017, with the result being that many clients have reduced their utilisation.
However, what is pleasing to note is that actions taken during the year to increase our client base have more than
offset these challenges, and overall our lending book has increased without relaxing our credit criteria. The
decrease in revenue in the segment reflects the change in our business model within one business unit to a traditional
trade finance model and which is consistent with the other businesses in the segment.
TECHNOLOGY
Our technology systems support and digital divisions have seen significant advancements and improvements
during 2017. We are satisfied with the strong performance of these support divisions.
INTEGRATED REPORTING
This is the first year of implementation of King IV and we are pleased to announce that we believe we have applied
all the requirements as set out in the code. Our integrated report has been amended to reflect this and in
addition, the King IV application register can be found on our website.
In addition, and aside from the excellent results posted by the Group, I am also pleased to announce that we have
been successful in meeting a number of the strategic objectives and these include:
- We've continued the very successful mentorship scheme started in 2013. This year's program focused on
developing leadership skills for junior management. 21 staff successfully completed the 6-month course and
graduated in November, bringing to 148 the total number of staff who have been through this mentorship
programme and which will continue in 2017.
- The Group agreed to continue to look for opportunities to assist local communities and travel-related emerging
businesses as it has done in the past year. In terms of social responsibility, the various business units have invested
a significant amount of time in supporting various charitable causes. The list of these engagements is substantial
and can be found on the Cullinan website.
- In keeping with Cullinan Holdings commitment to conservation and the various conservation projects in Africa,
the Group is a member of and supports The Treadright Foundation, a non- profit foundation established by the
Tollman family to encourage sustainable tourism. One of its many programmes is focused on preventing the
destruction of endangered species, including rhino, sharks and lions. The foundation also supports a number of
community projects amongst its various other projects.
PROSPECTS FOR 2018
Our overall view for 2018 is mixed. We are concerned by the potential risks in the year ahead, especially in
relation to the South African economy and inflation. Conversely, a weaker Rand is expected to have a positive
effect on our inbound tourism, coach transport and marine and boating businesses.
Our domestic travel businesses are well managed and while they continue to face challenges in the local economy
as mentioned above, we are confident these businesses are well run and will respond positively to these
challenges.
Looking ahead to 2018, significant capital expenditure is planned for our coach fleet to ensure that the brand
leadership position of our coach fleet is maintained. We will continue to focus on being the leaders in our various
businesses, providing excellent and exceptional service and value to our customers whilst maintaining excellent
relationships with our suppliers and providing sustainable and rewarding employment for our staff.
We will continue to look for acquisitions in the tourism, leisure and financial services sectors while maintaining our focus on
delivering exceptional service and value to our customers.
Finally, I would like to take this opportunity to thank our Chairman, directors, executives, our staff and our partners for their
support, dedication and professionalism during the 2017 year.
On Behalf of the Board
M Tollman
Chief Executive Officer D Standage
14 December 2017 Financial Director
Auditors Company secretary
Mazars were re-elected as auditors in 2017. B ALLISON
Sponsor
Arbor Capital Sponsors (Pty) Limited Registered office
(Registration number 2006/033725/07) 6 Hood Avenue, Rosebank, 2196
Directors
Executive: M TOLLMAN, LA PAMPALLIS, DK STANDAGE, L TOLLMAN
Non-Executive: GB TOLLMAN (Chairman) #, DD HOSKING #, R ARENDSE, M BURTON, A MENDIRATTA #
# Non-Resident
Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
(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: 14/12/2017 04:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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