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SKJ
SKJ
SKJ - Sekunjalo - Unaudited interim results: period ended 28 February 2007
SEKUNJALO INVESTMENTS LIMITED
Registration number 1996/006093/06
Share code: SKJ & ISIN: ZAE000017893
"SIL" (Incorporated in the Republic of South Africa)
UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 28 FEBRUARY 2007
OVERVIEW
CORPORATE PROFILE
Sekunjalo Investments Limited is a black-controlled investment holding company
domiciled in the Republic of South Africa with international operations and
points of representation in London and Mauritius. SIL is listed on the JSE
Limited ("JSE").
The Sekunjalo Group ("the Group") is invested in two primary sectors i.e.
Manufacturing and Resource-driven and Technology and Innovation-driven sectors.
Within the Manufacturing and Resource-driven sector the major investments are in
Industrials (primarily fishing )and within the Technology and Innovation-driven
sectors the main investments are in Healthcare and Pharmaceuticals, Information
Technology and Communication, Financial Services, Aquaculture, Biotechnology and
Media.
RECENT HIGHLIGHTS
Sekunjalo has recently received a number of prestigious BEE awards:
* The BusinessMap Foundation Top BEE Partnership Award for 2007
* Financial Mail/ Empowerdex 2006 Award for Top Ranked BEE Firm
* The Financial Mail Empowerdex Award for 2007 for the Top-Ranked listed BEE
Firm in the General Industrials sector of the JSE
ACCOUNTING POLICIES AND IFRS
In line with the listing requirements of the JSE, the financial statements are
prepared in accordance with International Financial Reporting Standards
("IFRS"), using the historical cost convention except for certain financial
instruments that are stated at fair value and adjustments, where applicable.
The basis of preparation is consistent with the prior year except for the effect
of any revisions to IFRS.
COMMENTARY ON RESULTS
The Sekunjalo Investments Limited results for the first six months of the
financial year exceed expectations and for the second year in a row reflect a
marked improvement when compared to the same period of the previous financial
year. Compared to the same period in 2006, reporting revenue is up 7,1 % to
R184,4 million from R 175 million, operating profit is up to
R12,1 million from a loss of R16,7 million, while headline earnings per share is
reflected at 2.9 cents compared to a loss of 3.31 cents per share as at 28
February 2006.
The Group has posted a profit at the interim stage of its financial year. This
is the first time that the Group has posted a profit at the interim stage in the
last five years. It should be noted that, historically, the Group has performed
well in the second half of the financial year due the cyclical nature of its
businesses. In line with this trend the Group expects a stronger performance in
the second half of the financial year. The Board has implemented strategies to
further improve operating efficiencies, attain optimal synergies and the
consolidation of key business areas, which should enhance the performance of the
Group even further.
REVIEW OF INVESTMENTS
FISHING AND AQUACULTURE
Premier Fishing has exceeded expectations in the first six months of the year,
largely due to the favourable Rand/Dollar exchange rate and good catches of West
and South Coast Rock Lobster. Enhanced operational efficiencies together with an
effective consolidation strategy have also contributed towards improved
performance. Premier`s success in the allocation of long term fishing rights is
providing a platform upon which Premier can roll-out its high growth business
strategy, which is to become one of the largest lobster fishing companies in the
Southern hemisphere. Premier`s success in reducing its long term debt is
allowing it to re-invest capital in the acquiring of further lobster rights and
partnering smaller lobster rights-holders. Premier Fishing is an exporter of
choice and its lobster brands are highly sought after in the USA, China, Japan
and Europe.
The performance of the abalone farm is exceeding Group expectations. This
thriving, well-managed operation continues to provide sustainable earnings and
is a substantial contributor to the sustainability of the abalone resource in
the country.
HEALTH CARE AND PHARMACEUTICALS
The Group is restructuring its health care investments to focus on the
pharmaceuticals sector. In line with this, the Group is investing in the
acquisition of more products and is partnering with a number of international
companies in expanding its generic pharmaceutical business. The Group has
enhanced its product portfolio as a result of its sound partnerships with large
multinational pharmaceutical companies. The Group has been successful in
securing large public sector tenders.
There are sufficient encouraging signs in the healthcare and pharmaceutical
businesses when compared with the same reporting period in recent years, to
suggest improved performance in the second half of the year.
INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS
The investment in the Informatics and Telecommunication sector has resulted in
its leadership in Business Intelligence (BI) software and business solutions in
the private sector in South Africa. The three companies that we have invested
in viz. Synergy, Fios and Saratoga are benefiting from closer collaboration in
software development and implementation, marketing and sales and a reduction in
corporate overheads.
This has resulted in a number of contracts being awarded by Blue Chip corporates
to our Business Intelligence investments. Having successfully implemented BI in
the private sector, we are embarking on a strategy to grow the business in the
public sector. This strategy is aligned with the current need in the public
sector for improved and efficient service delivery.
FINANCIAL SERVICES (LOCAL AND INTERNATIONAL)
The investment in the local financial services sector continues to perform well.
The businesses have completed a phase in its strategic life cycle, where the
product, platform and infrastructure are all in place to proceed with
significant population of clients, both locally and internationally. In this
respect, the investment in financial services has successfully partnered with a
major South African trade union in the roll out of its newly developed financial
products. This should contribute to increased revenue in the year ahead.
The international investments, based in London and Mauritius in asset management
and intermediary services are strong contributors to Group earnings. These
earnings are annuity and US dollar based and are expected to continue to
contribute to Group profitability in the years ahead
BIOTECHNOLOGY
Sekunjalo`s decision to invest in the high growth Biotechnology sector through
its investment Bioclones, has seen Bioclones launch a biotechnology product
into the market with annual global revenues of approximately $12 billion.
Furthermore Bioclones has also benefited from an investment by Government of
$5,3 million in its subsidiary Ribotech, with a view to capturing part of the
market share of GCSF which has annual global revenues of approximately $3
billion. Bioclones now has the Intellectual Property (IP) and product portfolio
to license to global partners in a market with global revenues of $15 billion
annually.
Bioclones has recently partnered with Swiss company Solidago, one of the worlds
most successful biotechnology companies, to license novel cancer treatment
products. Bioclones has recently invested considerably in upgrading its
manufacturing facilities to prepare for global supply. Bioclones currently has
22 global patents and will shortly announce results of research for some early
phase clinical trials involving infectious diseases in Africa.
DIVIDENDS
No dividend has been declared for the current period. The directors have to
balance the deployment of capital to support the growth of its investments and
the expectation of its shareholders of a maiden dividend. The directors are
exploring the possibility of declaring this maiden dividend post the financial
year end. The reduction in long term debt and the improved performance of the
Group are favorable factors in this regard.
PROSPECTS
Sekunjalo is now firmly established as a pre-eminent Black Economic Empowerment
(BEE) Group, applauded for its financial model, receiving many awards, with
strong business credibility and is a successful pioneer of BEE on the JSE. The
consistent and continuous financial success of the Group during the last five
years along with its strong platform for sustainable earnings has positioned the
Group as a partner and investor of choice in the area of BEE within corporate
South Africa. As a consequence of its success, the Group is now in a position to
evaluate and participate in large scale BEE transactions. Directors expect a
strong second half performance and the prospects for the year are excellent.
GROUP BALANCE SHEET
Unaudited Unaudited Audited
6 months to 6 months to Group to 31
28 February 28 February August 2006
2007 2006
R`000 R`000 R`000
ASSETS
Non current assets 590 624 378 952 538 970
Property, plant & 184 982 185 047 190 037
equipment
Pharma dossiers 22 950 24 650 23 800
Goodwill 89 261 35 330 68 829
Intangibles 14 891 6 781 13 611
Other investments 172 629 38 614 134 751
Investments in associates 10 120 8 364 7 110
Biological assets 17 331 10 627 16 331
Loans receivable 48 901 48 433 60 312
Deferred taxation 29 558 21 106 24 189
Current Assets 192 184 139 934 193 335
Inventory 36 954 37 817 27 854
Prepaid Expenses 4 929 - 2 604
FEC asset 62 32 38
Current Loans 5 560 5 560
Contract costs due from 3 885 3 885
customers
Tax 486 313 466
Trade and other 100 752 85 453 113 019
receivables
Bank 39 557 16 319 39 909
TOTAL ASSETS 782 808 518 886 732 305
EQUITY & LIABILITIES
Capital & Reserves
Share capital 28 26 27
Share premium 372 963 266 254 301 408
Non distributable reserves 11 238 8 078 10 262
Other distributable 100 - 100
reserves
Accumulated Losses 63 909 (22 048) 53 500
Equity attributable to 403 238 252 310 365 297
Parent
Outside shareholders 45 659 39 199 49 655
interest
Total Equity 448 897 291 509 414 952
Non current liabilities 152 471 94 235 125 975
Interest bearing 58 506 49 097 40 896
borrowings
Deferred tax 70 407 41 582 68 575
Operating Lease Liability 578 747
Post employment medical 2 212 1 827 1 970
costs
Non interest bearing 20 768 1 729 13 787
borrowings
Current Liabilities 181 440 133 142 191 378
Trade and other payables 67 548 56 097 58 341
Income received in advance 5 024 5 213 5 649
Policy Holder`s 15 603 11 827 17 323
Liabilities
Contract costs payable 3 113 3 113
Provisions 13 725 13 439 10 222
Current portion of LTL 9 961 16 828 37 369
Bank OD 60 455 24 660 50 774
Tax 6 010 5 078 8 587
TOTAL EQUITY & LIABILITIES 782 808 518 886 732 305
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Group to 31
28 February 28 February August 2006
2007 2006
R`000 R`000 R`000
Revenue 187 442 175 010 425 128
Profit from operations 12 098 (16 701) 92 293
Income from associates 241 1 878 605
Finance cost (2 146) (2 372) (3 466)
Profit before tax 10 194 (17 195) 89 432
Tax (1 117) 5 875 (15 373)
Profit/(Loss)after tax 9 077 (11 320) 74 059
Attributable to:
Outside shareholders (1 711) (1 512) 6 658
Parent 10 788 (9 808) 67 401
9 077 (11 320) 74 059
Headline earnings 10 788 (9 808) 66 314
Number of shares in issue 396 794 806 313 417 099 360 675 482
Weighted average number of 370 828 820 296 420 653 316 379 170
shares in issue
Diluted number of shares 425 352 624 298 336 028 357 810 172
in issue
Headline Earnings / 2.91 (3.31) 20.96
(loss)per share (cents)
Earnings /(loss)per share 2.91 (3.31) 21.30
(cents)
Diluted earnings / 2.54 (3.29) 18.84
(loss)per share (cents)
Net Asset Value per share 101.62 80.50 101.28
(cents)
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Group to 31
28 February 28 February August 2006
2007 2006
R`000 R`000 R`000
CASH FLOWS FROM OPERATING (1 938) (13 757) (12 190)
ACTIVITIES
CASH FLOWS FROM INVESTING (14 377) (30 799) (76 169)
ACTIVITIES
CASH FLOWS FROM FINANCING 6 285 (4 374) 36 882
ACTIVITIES
Increase / (Decrease) in (10 030) (48 930) (51 477)
cash and cash equivalents
Cash and cash equivalents (10 865) 40 612 40 612
at beginning of year
CASH EQUIVALENTS AT END OF (20 895) (8 318) (10 865)
YEAR
GROUP STATEMENT OF CHANGES IN EQUITY 1
Share Share Non distri-
Capital Premium butable
reserves
Balance at 31 August 2005 26 236 402 8 245
Adjustments
Balance at 31 August 2005 26 236 402 8 245
Net Profit from Activities
Issue from Share Capital 1 65 006
Share issue expenses
written off
Movement in Reserves 2 017
Revaluation of forward
exchange contracts
Dividend
Acquisition of
subsidiaries
Error
Balance at 31 August 2006 27 301 408 10 262
Net Profit from Activities
Issue from Share Capital 1 26 778
Share issue expenses (223)
written off
Movement in Reserves 976
Revaluation of forward
exchange contracts
Dividend
Acquisition of
subsidiaries
Balance at 28 February 28 327 963 11 238
2007
GROUP STATEMENT OF CHANGES IN EQUITY 2
Other Accumu- Total
distri- lated
butable Profit/
reserves (Loss)
Balance at 31 August 2005 487 (13 838) 231 322
Adjustments
Balance at 31 August 2005 487 (13 838) 231 322
Net Profit from Activities 67 401 67 401
Issue from Share Capital 65 007
Share issue expenses -
written off
Movement in Reserves (387) 1 630
Revaluation of forward -
exchange contracts
Dividend (63) (63)
Acquisition of -
subsidiaries
Error 5 5
Balance at 31 August 2006 100 53 505 365 302
Net Profit from Activities 10 788 10 788
Issue from Share Capital 26 779
Share issue expenses (223)
written off
Movement in Reserves 976
Revaluation of forward -
exchange contracts
Dividend (382) (382)
Acquisition of -
subsidiaries
Balance at 28 February 100 63 911 403 240
2007
GROUP STATEMENT OF CHANGES IN EQUITY 3
Minority Total
interest Equity
Balance at 31 August 2005 40 152 271 474
Adjustments
Balance at 31 August 2005 40 152 271 474
Net Profit from Activities 6 658 74 059
Issue from Share Capital 65 007
Share issue expenses -
written off
Movement in Reserves 1 630
Revaluation of forward -
exchange contracts
Dividend (63)
Acquisition of 2 845 2 845
subsidiaries
Error 5
Balance at 31 August 2006 49 655 414 957
Net Profit from Activities (1 711) 9 077
Issue from Share Capital 26 779
Share issue expenses (223)
written off
Movement in Reserves 976
Revaluation of forward -
exchange contracts
Dividend (382)
Acquisition of (2 285) (2 285)
subsidiaries
Balance at 28 February 45 659 448 899
2007
Dr MI Surve Norman Noland
Chairman and Chief Executive Deputy CEO
3 May 2007
Cape Town
Directors:
Dr MI Surve (Chairman and CEO); NT Noland (Deputy CEO); MY Kajee (CFO); D Case
(Non-Executive); M Goamab (Non-Executive); ZA Kota Non-Executive); Dr GP Mayende
(Non Executive); S Young (Non- Executive)
M G January (Company Secretary)
Registered Address:
Sekunjalo House
Block F, The Terraces
Steenberg Office Park
Tokai 7945
Cape Town, South Africa
Transfer Secretaries:
Link Market Services S.A (Pty) Ltd
11 Diagonal Street
Johannesburg 2001
Sponsor: Absa Capital
Date: 03/05/2007 09:48:01 Produced by the JSE SENS Department.
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