SOUTH OCEAN HOLDINGS LIMITED - Group Summary Consolidated Interim Financial Results Announcement For the Six Months Ended 30 June 2018

Release Date: 08/08/2018 16:00
Code(s): SOH
 
Wrap Text
Group Summary Consolidated Interim Financial Results Announcement For the Six Months Ended 30 June 2018

South Ocean Holdings Limited
(Registration number 2007/002381/06)
Incorporated in the Republic of South Africa
(“South Ocean Holdings”, “the Group”)
Share code: SOH       ISIN: ZAE000092748


GROUP SUMMARY CONSOLIDATED INTERIM FINANCIAL RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED
                                         30 JUNE 2018


                                                     SALIENT FEATURES

                                 Group revenue increased by 26.7% to R969.0 million
                          Headline loss per share improved by 9.5 cents to headline loss of 0.7 cents
                                     Loss per share decreased by 12.9 cents to 6.6 cents
                            Tangible net asset value per share decreased by 24.6% to 236.7 cents

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                    30 June 2018           30 June 2017   31 December 2017
                                                                      (Unaudited)            (Unaudited)          (Audited)
                                                  Notes                    R’000                  R’000              R’000
Assets
Non-current assets                                                       203 866                313 976            297 500
Property, plant and equipment                        4                   194 083                273 538            293 035
Intangible assets                                    4                         -                  8 212                  -
Deferred tax assets                                                        9 783                 32 226              4 465
Current assets                                                           597 750                694 405            389 370
Inventories                                                              175 726                340 932            162 879
Trade and other receivables                                              407 543                333 897            214 971
Cash and cash equivalents                                                 14 481                 19 576             11 520
Disposal group and assets held for sale                                  253 521                      -            198 024

Total Assets                                                           1 055 137              1 008 381            884 894

Equity and Liabilities
Equity                                                                   481 111                499 425            471 953
Share capital and share premium                      5                   461 342                441 645            441 645
Reserves                                                                   2 052                  1 793              1 230
Retained earnings                                                         17 717                 55 987             29 078
Liabilities
Non-current liabilities                                                   72 370                 81 291             84 648
Interest-bearing borrowings                          6                    43 338                 47 920             50 294
Deferred tax liabilities                                                  28 028                 32 879             33 862
Share-based payments                                                       1 004                    492                492
Current liabilities                                                      448 906                427 665            250 813
Trade and other payables                                                 248 951                238 789            195 448
Interest-bearing borrowings                          6                   197 016                188 820             55 365
Taxation payable                                                           2 939                     56                  -
Disposal group and liabilities held for sale                              52 750                      -             77 480
Total liabilities                                                        574 026                508 956            412 941

Total Equity and Liabilities                                           1 055 137              1 008 381            884 894

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                Six months ended                            Year ended
                                                          30 June 2018     30 June 2017               31 December 2017
                                                                               Restated^
                                                            (Unaudited)      (Unaudited)        %             (Audited)
                                                  Notes          R’000            R’000     Change               R’000
Continuing operations
Revenue                                                        831 266          622 558       33.5           1 425 777
Cost of sales                                                 (772 574)        (599 878)      28.8          (1 359 186)
Gross profit                                                    58 692           22 680      158.8              66 591
Other operating income                                               2            4 764                          6 795
Administration expenses                                        (18 814)         (15 616)                       (38 438)
Distribution expenses                                           (6 494)          (6 368)                        (2 532)
Operating expenses                                             (18 857)         (20 066)                       (13 117)
Operating profit/(loss)                                         14 529          (14 606)     199.5              19 299
Finance income                                                     478              316                            828
Finance costs                                                  (11 211)         (10 828)                       (23 946)
Profit/(Loss) before taxation                                    3 796          (25 118)     115.1              (3 819)
Taxation                                           8            (2 601)           5 188                         (2 404)
Profit/(Loss) for the period from
continuing operations                                            1 195          (19 930)     106.0              (6 223)
Loss for the period from discontinuing
operations                                         7           (12 556)         (10 511)                       (51 127)
Loss for the period                                            (11 361)         (30 441)      62.7             (57 350)
Other comprehensive income
Items that may be reclassified to profit or
loss
Exchange differences on translating foreign
operations of continuing operations                                516              (6)                          (135)
Exchange differences on translating foreign
operations of discontinuing operations                             306               -                           (434)
Total items that may be reclassified to
profit or loss net of taxation                                     822              (6)                          (569)
Total comprehensive loss attributable to
equity holders of the Group                                    (10 539)        (30 447)                       (57 919)

^ Refer to note 16 on restatement



PER SHARE INFORMATION

                                                              Cents per         Cents per                    Cents per
                                                                  share             share                        share
Earnings / (loss) per share - basic and diluted
– continuing operations                                             0.7            (12.8)                         (4.0)
Loss per share – basic and diluted –
discontinuing operations                                           (7.3)            (6.7)                        (32.7)

Loss per share – basic and diluted                                 (6.6)           (19.5)    (66.2)              (36.7)

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                               Six months ended                   Year ended
                                                           30 June 2018     30 June 2017    31 December 2017
                                                             (Unaudited)      (Unaudited)           (Audited)
                                                   Notes          R’000            R’000               R’000
Share capital
Opening balance                                     5             1 274            1 274               1 274
Issue of ordinary shares during the six months
through the exercise of option under the non-
renounceable rights offer                                           469                -                   -
Closing balance                                                   1 743            1 274               1 274

Share premium
Opening balance                                     5           440 371          440 371             440 371
Issue of ordinary shares during the six months -
exercise of option under the non-renounceable
rights offer                                                     19 228                -                   -
Closing balance                                                 459 599          440 371             440 371

Foreign currency translation reserve
Opening balance                                                   1 230            1 799               1 799
Exchange differences on translation of foreign
operation                                                           822               (6)               (569)

Closing balance                                                   2 052            1 793               1 230

Retained earnings
Opening balance                                                  29 078           86 428              86 428
Total comprehensive loss for the period                         (11 361)         (30 441)            (57 350)
Closing balance                                                  17 717           55 987              29 078

SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                 Six months ended                           Year ended
                                                                         30 June 2018                 30 June 2017    31 December 2017
                                                                           (Unaudited)                  (Unaudited)           (Audited)
                                                                                R’000                        R’000               R’000
Cash flows from operating activities
Cash (utilised in) / generated from operations                               (123 100)                      24 375             146 931
Finance income                                                                    534                          413                 996
Finance costs                                                                 (12 683)                     (12 400)            (26 988)
Net cash (utilised in) / from operating activities                           (135 249)                      12 388             120 939
Cash flow from investing activities
Purchase of property, plant and equipment                                      (5 207)                      (2 228)             (6 770)
Proceeds from sale of property, plant and equipment                               274                          379                 383
Purchase of intangible assets                                                    (807)                        (996)             (1 040)
Net cash from investing activities                                             (5 740)                      (2 845)             (7 427)
Cash flows from financing activities
Shares issued                                                                  19 697                            -                   -
Proceeds from interest bearing borrowings                                     148 866                          676              10 699
Repayment of interest bearing borrowings                                      (25 507)                     (12 973)           (115 703)
Net cash from / (used in) financing activities                                143 056                      (12 297)           (105 004)
Total cash and cash equivalents movements for the
period                                                                         (2 069)                      (2 754)              8 508
Cash and cash equivalents at the beginning of the period                       30 275                       22 336              22 336
Effect of exchange rate movement on foreign entity balances                       822                           (6)               (569)
Total cash and cash equivalents at end of the period                           29 028                       19 576              30 275
Cash and cash equivalents from continuing operations                           14 481                        8 556              11 520
Cash and cash equivalents from discontinuing
operations                                                                     14 547                       11 020              18 755




SELECTED NOTES TO THE SUMMARISED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1.   General information
     South Ocean Holdings (“SOH”) and its subsidiary companies manufacture and distribute electrical cables, import and
     distribute light fittings, lamps, electrical accessories, audio visual hardware and accessories and have property
     investments. SOH is a public company listed on the JSE Limited (“JSE”) and is incorporated and domiciled in the
     Republic of South Africa.

     The unaudited summarised consolidated interim financial information was prepared by Mr JP Bekker CA(SA) and was
     approved for issue by the directors on 7 August 2018.

2.   Basis of preparation
     The summary consolidated interim Financial Statements of SOH have been prepared in accordance with the JSE
     Listings Requirements for provisional reports, and the requirements of the Companies Act, 2008 of South Africa
     applicable to summary Financial Statements. The summary consolidated interim Financial Statements should be read
     with the audited Financial Statements for the year ended 31 December 2017. The JSE Listing Requirements require
     provisional reports to be 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 and Financial Pronouncements as issued, by the Financial Reporting
     Standards Council and to also, as a minimum, contain the information required by IAS 34 “Interim Financial Reporting”.
     The accounting policies applied in the preparation of the summary Consolidated Financial Statements are in terms of
     IFRS and are consistent with those accounting policies applied in the preparation of the previous summary Consolidated
     Financial Statements.

     The directors take full responsibility for the preparation of the financial information.

3.   Accounting policies
     The accounting policies adopted in the preparation of the summary Consolidated Financial Statements are in terms of
     IFRS and are consistent with those applied in the audited Financial Statements for the year ended 31 December 2017,
     except where indicated. IFRS 9 and IFRS 15 are the new standards or amendments that were issued since the last
     Annual Report that are applicable to the Group and has not had a material impact on the reported results.

4.   Property, plant and equipment and intangible assets
     During the first six months, the Group invested R6.0 million (2017: R3.2 million) in capital expenditure mainly relating to
     the acquisition of plant and machinery at South Ocean Electric Wire Company Proprietary Limited (“SOEW”) as well as
     the replacement of vehicles at SOEW and infrastructure improvements at Anchor Park Investments 48 Proprietary
     Limited (“Anchor Park”). An impairment charge of R8.4 million (2017: R10.3 million due to the value in use of the
     subsidiary being lower than the enterprise value) was raised against the tangible assets at Radiant Group Proprietary
     Limited (“Radiant”) and the properties held for sale in Anchor Park to record the assets at net realisable value
     subsequent to it being reclassified to ‘held for sale’ (refer note 12). The details of changes in tangible and intangible
     assets are as follows:

                                                                                                       Tangible assets               Intangible assets
                                                                                                            (Unaudited)                     (Unaudited)
                                                                                                                 R’000                           R’000
         Six months ended 30 June 2018
         Opening net carrying amount                                                                           293 035                               -
         Additions                                                                                               5 208                             807
         Disposals                                                                                                (668)                           (534)
         Depreciation and amortisation                                                                          (7 775)                              -
         Non-Current assets reclassified to held for sale                                                    ^ (95 717)                           (273)
         Closing net carrying amount                                                                           194 083                               -

         Six months ended 30 June 2017
         Opening net carrying amount                                                                            289 699                          7 783
         Additions                                                                                                2 226                            997
         Disposals                                                                                                 (342)                             -
         Impairment                                                                                             (10 326)                             -
         Depreciation and amortisation                                                                           (7 719)                          (568)
         Closing net carrying amount                                                                            273 538                          8 212
 
         Year ended 31 December 2017                                                                           (Audited)                      (Audited)
         Opening net carrying amount                                                                            289 699                          7 783
         Additions                                                                                                6 770                          1 040
         Disposals                                                                                                 (341)                        (1 339)
         Impairments reversed                                                                                    18 743                              -
         Depreciation and amortisation                                                                          (15 450)                             -
         Non-Current assets reclassified to held for sale                                                        (6 386)                        (7 484)
         Closing net carrying amount                                                                            293 035                              -

         ^  Amount reclassified to assets held for sale prior to R8.4 million write down to net realisable value less cost to sell

5.   Share capital and share premium

                                                                Number of            Ordinary        Share
                                                                   Shares              shares      premium              Total
                                                                   issued             (R’000)       (R’000)            (R’000)
      At 30 June 2018 (Unaudited)
      Opening balance                                         156 378 794              1 274       440 371            441 645
      Issue of ordinary shares during the six months
      through the exercise of options issued under the
      non-renounceable rights offer                            46 898 000                469        19 228             19 697
      Closing balance                                         203 276 794              1 743       459 599            461 342
      At 30 June 2017 (Unaudited)
      Opening and closing balance                             156 378 794              1 274       440 371            441 645
      At 31 December 2017 (Audited)
      Opening and closing balance                             156 378 794              1 274       440 371            441 645



     SOH concluded a Rights Offer to Shareholders recorded in the register at the close of trade on Friday, 20 April 2018, to
     subscribe for Rights Offer Shares on the basis of 29.99000 Rights Offer Shares for every 100 SOH shares held on such
     date at a Rights Offer Price of 42 cents per Rights Offer Share. The Rights Offer Price represented a premium of
     approximately 92.73% to the 30-day VWAP share price of SOH of 21.79236 cents per share as at Wednesday, 7 March
     2018. The Rights Offer was underwritten by Macrovest 147 Proprietary Limited (“Marcrovest”). The Group successfully
     raised R19 697 160 cash through the issue of 46 898 000 shares. The proceeds of this Rights Offer were applied to
     reduce borrowings.

6.   Interest-bearing borrowings
     The current portion of the interest-bearing borrowings includes the bank overdraft balance of R209.4 million (2017:
     R177.4 million).

     The details of the total interest-bearing borrowings balance are as follows:

                                                                      As at                   As at                  As at
                                                               30 June 2018            30 June 2017       31 December 2017
                                                                 (Unaudited)              (Unaudited)             (Audited)
      Secured loans                                                   R’000                   R’000                  R’000
      Non-current liabilities                                        43 338                  47 920                 50 294
      Current liabilities                                           197 016                 188 820                 55 365
      Total secured loans                                           240 354                 236 740                105 659

      The movement in borrowings is analysed
      as follows:
      Opening balance                                               105 659                 249 037                249 037
      Additional loans utilised                                     135 533                  19 363                 10 699
      Finance costs                                                  11 336                  10 677                 21 705
      Repayments                                                    (25 507)                (42 337)              (137 409)
      Movement in non-current assets/(liabilities)
      held for sale                                                  13 333                       -                (38 373)
      Closing balance                                               240 354                 236 740                105 659



     The Group’s bankers, First National Bank Limited (“FNB”) had renewed the bank overdraft facility of R254.0 million in
     May 2018 for a period of four months. Due to the negative financial performance of the Group, FNB had indicated that
     they will review the facilities every three months with the next review being at the end of August 2018 based on the June
     2018 results.

7.   Discontinuing operation and non-current assets held for sale
     Radiant Group has not been profitable for the last few years. The Board has taken a decision to find a suitable buyer for
     this Company together with the properties from which it operates. The Board has appointed a consultant to assist with
     this process. The expected time of completion of the sale of this Company and the properties is by the end of 2018. The
     assets and liabilities of the Company held for sale, as well as the properties, are set out below:

                                                                   30 June 2018            30 June 2017         31 December 2017
                                                                     (Unaudited)             (Unaudited)                (Audited)
                                                                          R’000                   R’000                    R’000
      Assets and liabilities
      Assets of disposal group
      Property                                                           88 000                       -                        -
      Inventories                                                       111 072                       -                  136 227
      Trade and other receivables                                        39 902                       -                   43 042
      Cash and cash equivalents                                          14 547                       -                   18 755
      Total assets                                                      253 521                       -                  198 024
      Liabilities of disposal group
      Interest bearing borrowings                                        25 040                       -                   38 374
      Derivative financial instrument                                         -                       -                    4 348
      Accounts payable                                                   27 710                       -                   34 758
      Total liabilities                                                  52 750                       -                   77 480



                                                                  30 June 2018            30 June 2017        31 December 2017
                                                                    (Unaudited)             (Unaudited)               (Audited)
                                                                         R’000                   R’000                   R’000
      Financial performance of discontinuing
      operation
      Revenue                                                          137 766                 142 355                 303 017
      Cost of sales                                                    (88 150)               (101 606)               (229 666)
      Gross profit                                                      49 616                  40 749                  73 351
      Other operating income                                             1 379                     843                     644
      Operating expenses                                               (52 461)                (47 644)               (100 198)
      Impairment of current and non-current assets                     (21 607)                (10 326)                 (8 295)
      Operating loss                                                   (23 073)                (16 378)                (34 498)
      Finance income                                                        56                      97                     167
      Finance expenses                                                  (1 473)                 (1 572)                 (3 042)
      Loss before taxation                                             (24 490)                (17 853)                (37 373)
      Taxation                                                          11 934                   7 342                 (13 754)
      Loss for the period                                              (12 556)                (10 511)                (51 127)
      Cash flow information                                                                          -
      Net cash inflow from operating activities                        (10 849)                 15 104                  40 566
      Net cash outflow from investing activities                          (544)                 (1 057)                 (1 139)
      Net cash outflow from financial activities                         8 280                   9 473                 (18 194)
      Net increase in cash generated by
      subsidiaries                                                      (3 113)                 23 520                  21 233



8.   Taxation
     Income tax expense is recognised on management’s best estimate of the weighted average annual income tax rate
     expected for the full financial year. The effective tax rate calculated is 45.1% (2017: 29.2%). The high effective tax rate is
     due to deferred tax not provided on loss making subsidiaries.

9.    Reconciliation of headline loss

                                                                         Six months ended                           Year ended
                                                                      30 June 2018      30 June 2017          31 December 2017
                                                                        (Unaudited)       (Unaudited)                 (Audited)
                                                                             R’000             R’000                     R’000

       Loss attributable to the equity holders of the Group for
       the period                                                          (11 361)          (30 441)                  (57 350)
       Profit on disposal of property, plant and equipment                       -               (38)                      (30)
       Net impairment of property, plant and machinery                           -                 -                     1 187
       Net impairment loss of investment in assets held for
       sale                                                                 10 217            14 491                         -
       Headline loss for the period                                         (1 144)          (15 988)                  (56 193)

       Headline loss per share                                                (0.7)            (10.2)                    (40.1)
       Headline earnings/(loss) per share (cents)– of
       continuing operations - basic and diluted                               0.7             (12.8)                     (2.1)
       Headline (loss) /earnings per share (cents) of
       discontinuing operations – basic and diluted                           (1.4)              2.6                     (38.0)



10.   Weighted average number of shares

                                                                         Six months ended                         Year ended
                                                                     30 June 2018     30 June 2017          31 December 2017
                                                                       (Unaudited)      (Unaudited)                 (Audited)
       
       Number of shares in issue                                      203 276 794      156 378 794               156 378 794
       Weighted average number of shares in issue for basic
       and diluted earnings per share at the beginning of the
       period                                                         156 378 794       156 378 794              156 378 794
       Issue of ordinary shares during the six months.
       Shares issued at 30 April 2018                                15 805 403                 -                        -
       Weighted average number of shares in issue for basic
       and diluted earnings per share at the end of the period.       172 184 197       156 378 794              156 378 794



      There are no dilutionary instruments in issue and therefore the diluted weighted average number of shares are similar to
      that disclosed above.

11.   Net asset value

                                                                          As at                                         As at
                                                                   30 June 2018         30 June 2017         31 December 2017
                                                                     (Unaudited)          (Unaudited)                (Audited)
       Net asset value per share (cents)                                  236.7                319.4                    301.8
       Tangible net asset value per share (cents)                         236.7                314.1                    301.8



12.   Impairment of assets in subsidiaries
      To comply with IAS 36, the Group performed an impairment test of its assets in subsidiaries, as a result no impairment
      was recognised in the current period (2017: R14.5 million) in the Statement of Comprehensive Income for assets owned
      by Anchor Park.

      An impairment of current and non-current assets of R21.6 million was recognised which relates to a reduction in the net
      realisable value of the assets held for sale.

13.   Going Concern
      The summary consolidated Financial Statements have been prepared on the basis of accounting policies applicable to a
      going concern. This basis presumes that funds will be available to finance future operations and that the realisation of
      assets and liabilities, contingent obligations and commitments will occur in the ordinary course of the business.

      At 30 June 2018, the Group’s assets, fairly valued, exceeded its liabilities. Furthermore, management assessed the
      Group’s liquidity forecasts for a period of twelve months. Various scenarios have been considered to test the Group’s
      resilience against operational risks.

      Management has concluded that the Group’s ability to continue to meet its financial obligations as they fall due is
      dependent on the Group’s ability to continue to improve its performance, and/or the Group’s bankers, FNB, renewing the
      Group’s working capital facilities (refer note 6) at the end of August 2018. Each of these matters present a material risk
      to the Group remaining as a going concern.

14.   Interim dividend declaration
      The Company’s policy is to consider the declaration of a final dividend after its financial year-end and no interim dividend
      is declared.

15.   Segment reporting
      The chief operating decision makers review the Group’s internal reporting in order to assess performance and have
      determined the operating segments based on these reports. The business performance of the operating segments:
      electrical cable manufacturing, lighting and electrical accessories and property investments, are evaluated from the
      market and product performance perspective.

      The segment information has been prepared in accordance with IFRS 8 – “Operating Segments”, which defines the
      requirements for the disclosure of financial information of an entity’s segments.

      The Standard requires segmentation on the Group’s internal organisation and reporting of revenue and adjusted EBITDA
      based upon internal accounting presentation.

      The segment revenue and EBITDA generated by the Group’s reportable segments are summarised as follows:

                                                                              Adjusted              Segment              Segment
       Six months ended                                   Revenue               EBITDA               assets          liabilities
                                                            R’000                R’000                R’000                R’000
       30 June 2018 (Unaudited)
       Electrical cables manufacturing                    832 195               28 480              662 844              431 368
       Lighting and electrical
       accessories (discontinuing
       operations)                                        139 243               (4 690)             168 883               50 226
       Property investments                                11 956               (8 039)             200 910               50 909
                                                          983 394               15 751            1 032 637              532 503
       30 June 2017 (Unaudited)
       Electrical cables manufacturing                    622 729                8 042              577 796              344 904
       Lighting and electrical accessories                142 424              (10 196)             225 519               69 229
       Property investments                                11 425                9 467              170 108               53 696
                                                          776 578                7 313              973 423              467 829
       Year ended
       31 December 2017 (Audited)
       Electrical cables manufacturing                  1 427 627               29 267              487 432              243 748
       Lighting and electrical accessories
       (discontinuing operations)                         304 977              (34 325)             198 024               77 480
       Property investments                                22 794               17 924              189 800               50 208
                                                        1 755 398               12 866              875 256              371 436

       A reconciliation of the total segment report to the statement of financial position and statement of comprehensive income
       is provided as follows:

                                                                    Six months ended                         Year ended
                                                                 30 June 2018      30 June 2017        31 December 2017
                                                                   (Unaudited)       (Unaudited)               (Audited)
                                                                                      (Restated)
                                                                        R’000             R’000                   R’000
 Revenue
 Reportable segment revenue                                           983 394           776 578               1 755 398
 Inter-segment revenue (property rentals)                             (10 692)          (10 692)                (20 784)
 Inter-segment revenue - other                                         (3 670)             (973)                 (5 820)
 Discontinuing operations                                            (137 766)         (142 355)               (303 017)
 Revenue per consolidated statement of
 comprehensive income                                                 831 266           622 558               1 425 777

 Loss before tax
 Adjusted EBITDA                                                       15 751             7 313                  12 866
 Corporate and other overheads                                        (15 609)           (9 883)                (16 151)
 Depreciation                                                          (7 775)           (7 719)                (15 450)
 Impairment of intangible assets – lighting and electrical
 accessories segment                                                     (378)                -                  (5 573)
 Reversal of impairment of plant and machinery –
 electrical cable manufacturing segment                                     -                 -                  18 743
 Amortisation of intangible assets – lighting and electrical
 accessories segment                                                     (534)             (568)                 (1 339)
 Impairment of non-current assets – lighting and electrical
 accessories segment                                                        -                 -                  (8 295)
 Impairment of investment in subsidiaries                                   -           (20 127)                      -
 Discontinuing operations                                              23 074            16 378                  34 498
 Operating profit / (loss)                                             14 529           (14 606)                 19 299
 Finance income                                                           478               316                     828
 Finance cost                                                         (11 211)          (10 828)                (23 946)
 Profit/(loss) before taxation                                          3 796           (25 118)                 (3 819)
 Taxation                                                              (2 601)            5 188                  (2 404)
 Loss for the period from discontinuing operations                    (12 556)          (10 511)                (51 127)
 Loss for the period                                                  (11 361)          (30 441)                (57 350)
 Assets
 Reportable segment assets                                          1 032 637           973 423                 875 256
 Corporate and other assets                                            12 717             2 732                   5 173
 Deferred taxation                                                      9 783            32 226                   4 465
 Total assets per statement of financial position                   1 055 137         1 008 381                 884 894
 Liabilities
 Reportable segment liabilities                                       532 503           467 829                 371 436
 Corporate and other liabilities                                       10 555             8 192                   7 643
 Deferred taxation                                                     28 028            32 879                  33 862
 Taxation payable                                                       2 939                56                       -
 Total liabilities per statement of financial position                574 026           508 956                 412 941

16.   Restatement
      Disposal Group held-for-sale disclosed as discontinued operations on 30 June 2018.

      The Board of SOH took the decision to dispose of its 100% interest in Radiant, together with the properties from which the business
      operates (together referred to as the “Disposal Group”).

      The effect of this decision is that the Disposal Group is accounted for as assets and liabilities held-for-sale.

      In line with the requirements of IFRS 5 par. 38, the consolidated Statement of Comprehensive Income for the
      comparative period ended 30 June 2017 has been restated to account for Radiant and the properties from which it operates as
      a Disposal Group held-for-sale. In terms of IFRS 5 par. 40, the consolidated Statement of Financial Position for 30 June
      2017 was not restated to reflect the held-for-sale classification.

      Impact on consolidated Statement of Comprehensive Income

                                                                         Six months ended                      Increase/(Decrease)
                                                                   30 June 2017         30 June 2017                 30 June 2017
                                                                  As previously             Restated ^
                                                                       reported
                                                                          R’000                R’000                        R’000
       Revenue                                                          764 913              622 558                     (142 355)
       Cost of sales                                                   (701 485)            (599 878)                     101 607
       Gross profit                                                      63 428               22 680                      (40 748)
       Other operating income                                             5 606                4 764                         (842)
       Administration expenses                                          (23 191)             (15 616)                       7 575
       Distribution expenses                                            (15 858)              (6 368)                       9 490
       Operating expenses                                               (60 969)             (20 066)                      40 903
       Operating loss                                                   (30 984)             (14 606)                      16 378
       Finance income                                                       413                  316                          (97)
       Finance costs                                                    (12 400)             (10 828)                       1 572
       Loss before taxation                                             (42 971)             (25 118)                      17 853
       Taxation                                                          12 530                5 188                        7 342
       Profit/(loss) for the period from continuing
       operations                                                       (30 441)             (19 930)                      10 511
       Loss for the period from discontinuing operations
                                                                              -              (10 511)                     (10 511)
       Loss for the period                                              (30 441)             (30 441)                           -

       ^ Restatement in terms of IFRS 5

      There has been no impact on previously reported earnings per share and attributable earnings to equity holders of the
      Company.

17.   Related party information
      There have been no transactions with related parties that are material to the interpretation of these results.

18.   Subsequent events
      Notwithstanding the above, the directors are not aware of any other significant events arising since the end of the
      financial period, which would materially affect the operations of the Group or its operating segments, not dealt with in the
      financial results.

COMMENTARY

Introduction
The Board of SOH hereby announces its summary consolidated results for the six months ended 30 June 2018 (“the period”).

SOH is an investment holding company, comprising four operating subsidiaries namely: SOEW a manufacturer of low voltage
electrical cables; Radiant, an importer and distributor of light fittings, lamps, electrical accessories, audio visual hardware and
accessories; Anchor Park, a property holding company and Icembu Services
Proprietary Limited, a light fittings assembly company.

Financial overview
Earnings
Group revenue for the period ended 30 June 2018 increased by 26.7% (2017: 15.2 %, decreased) to R969.40 million (2017:
R764.9 million). The Group’s gross profit increased by 70.8% (2017: 26.7%, decreased) to R108.3 million (2017: R63.4 million)
and operating loss decreased by R22.4 million to a loss of R8.5 million (2017: R31.0 million) compared to the prior period.

Group loss before tax decreased by 51.8% (2017: 333.2%, decrease in profit before tax) to a loss of R20.7 million (2017: R43.0
million) compared to the prior period. Basic loss per share decreased by 66.2% (2017: 364.3%, decrease in earnings) to a loss of
6.6 cents (2017: 19.5 cents, loss) with headline loss per share decreasing by 93.1% (2017: 137.2%, decrease in headline
earnings) to earnings of 0.7 cents (2017:10.2 cents, loss) compared to the prior period. Headline earnings for the period
amounted to R1.1 million (2017: R16.0 million, loss).

Group’s earnings were negatively impacted by its low B-BBEE rating. Management is working hard to improve this situation,
which will enable the Group to do business in the Public Sector with a specific focus on State Owned Entities and Municipalities.

Cash flow and working capital management
Cash utilised in operations amounted to R126.8 million (2017: R12.4 million, generated) during the period. Working capital
increased by R21.6 million (2017: R27 million, increased) primarily due to increases in accounts receivable. The trade receivables
book continues to be well managed in an increasingly challenging credit environment. Working capital investment is currently at
47.2% (2017: 29.1%) of revenue.

The Group invested R6.0 million (2017: R3.2 million) in capital expenditure which was mainly financed by long-term borrowings
during this period and utilised R25.5 million (2017: R42.3 million) to repay its interest-bearing borrowings.

The Group’s net cash utilised during the period amounted to R1.6 million (2017: R2.8 million, cash utilised), decreasing the bank
balance to R29.0 million (2017: R19.6 million) as at end of the financial period.

Segment results
Electrical cables manufacturing - SOEW
SOEW reported revenue of R832.2 million (2017: R622.7 million), which is an increase of 33.6% (2017: 16.3%, decrease in
revenue) when compared to the same period in the prior year. The increase in SOEW’s revenue is attributed mainly to an
improvement in demand due to lower supply from competitors and a volatile Rand Copper Price (RCP) even though the market
demand and economic conditions have not improved. Production levels increased in line with the increased demand by 6.2% in
the first six months of the year. The Rand Copper Price (RCP) was volatile during the period, fluctuating between increases of
3.4% and decreases of 6.9%.

The increase in market demand for the first six months of the year has resulted in an increase in margins.

Lighting and electrical accessories – Radiant
Radiant reported revenue of R139.2 million (2017: R142.4 million), which is a decrease of 2.2% (2017: 13.0%, decrease in
revenue) when compared to the same period in the prior year. Revenue was under severe pressure in the first half of 2018 due to
low demand and tough trading conditions. This situation is expected to abate in the second half of the year.

Gross profit margins have improved during the period if compared to the same period in the prior period, due to better price
negotiations.

Radiant has managed to curtail expenditure reflecting no increase in expenses when compared to the same period in the prior
year.

Radiant is confident that the Company is well positioned for growth. It has seen an improvement in customer confidence and
loyalty from the implementation of its turn-around strategy.
Property investments – Anchor Park
Anchor Park’s revenue is derived from Group companies, as it leases its properties to fellow subsidiaries.

Seasonality
The Group’s earnings are affected by seasonality as earnings for the second half of the year are historically higher than the first
six months. Management expects the historic seasonal trend to continue in future.

Prospects
The macro-economic environment in which the Group operates is not expected to improve during the next six months. With
fundamental political and fiscal uncertainties remaining a key driver of economic reality, the group will be looking internally for
opportunities to improve the profitability of the operating entities.

SOEW is expected to maintain its focus on productivity and efficiency improvements on its current turnover levels. Besides
intervening on the cost of manufacturing electrical wire, the revised sales strategy through strengthening of the sales teams is
starting to show some improvement. The in-bound supply chain has however been disrupted during July and August this year with
one of its key suppliers announcing force majeure on its ability to supply raw materials after fatalities at its mining operation. The
impact of this event may cause disruptions in SOEW’s ability to service its customers for as long as the supply chain disruption
persists.

The Radiant transaction, as announced on SENS on 3 July 2018, is expected to be concluded by the end of the current financial
year. The Group will be applying the cash inflows to reduce its short-term borrowings with its bankers, First National Bank. This
transaction will initiate the needed correction to the Group’s capital structure.

The Board will continue its journey towards having better black ownership, also recognising the importance of racial
transformation required by the market in which the Group operates. The current BEE status of the Group is not reflective of its
view on transformation and this process will be receiving heightened attention from the Board.

The drivers for growth are local economic growth, increasing the customer base, improving the BEE shareholding and
improvement in efficiencies.

Management is confident that the above actions will return the Group to profitability.

Director changes
Ms MK Lehloenya resigned as Director and Chief Financial Officer on the 31 January 2018. Mr B Petersen was appointed as
Non-Executive Director on the 11 June 2018.

Appreciation
The directors would like to express their appreciation towards the management and staff as well as all our valued customers,
suppliers, advisors, business partners, shareholders and stakeholders for their continued support.

The above information, including any projections, included in this announcement have not been reviewed or reported on by SOH’s
independent auditors.


8 August 2018
On behalf of the Board




KH Pon CA(SA)                                                                                                    JP Bekker CA(SA)
Chairman                                                                                          Chief Executive Officer and acting
                                                                                                             Chief Financial Officer


        Directors: KH Pon# (Chairman), HL Li#º (Deputy Vice-Chairman), JP Bekker* (Chief Executive Officer and acting Chief
                              Financial Officer), N Lalla#, B Petersen?, CY Wu?º, DJC Pan ?@ (Alternate)


                                                   Company Secretary: WT Green
                                                                                      
                                     * Executive      # Independent Non-executive     ? Non-executive
                                                      º Taiwanese @ Brazilian




Corporate Information

Registered Office: 12 Botha Street, Alrode 1451, P.O. Box 123738, Alrode, 1451, Telephone: +27(11) 864 1606, Telefax:
+27(86) 628 9523 Website: www.southoceanholdings.com
Company Secretary: WT Green, 21 West Street, Houghton, 2198, P.O. Box 123738, Alrode, 1451
Sponsor: Arbor Capital Sponsors Proprietary Limited, (Registration No: 2006/033725/07), 20 Stirrup Lane, Woodmead Office
Park, Corner Woodmead Drive and Van Reenens Avenue, Woodmead, 2191 (Suite #439, Private Bag X29, Gallo Manor, 2052)
Share Transfer Secretary: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Bierman Avenue,
Rosebank, Johannesburg, 2196, P.O. Box 61051, Marshalltown, 2107, South Africa Telephone: +27(11) 370 5000, Telefax:
+27(11) 688 5200 Website: www.computershare.com
Auditors: PricewaterhouseCoopers Inc. 4 Lisbon Lane, Waterfall City, Jukskeiview, Johannesburg, 2090. Telephone: +27(12)
797 4000 Telefax +27(12) 797 5800, Website: www.pwc.co.za

Date: 08/08/2018 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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