| Wed 5 Dec 2007, 8:12 | | SKJ - Sekunjalo - Audited Results For The Year Ended 31 August 2007 |
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SKJ
SKJ
SKJ - Sekunjalo - Audited Results For The Year Ended 31 August 2007
SEKUNJALO INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: SKJ & ISIN: ZAE000017893
("Sekunjalo")
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2007
GROUP BALANCE SHEET
Audited Audited
Group to Group to
31 August 2007 31 August 2006
R`000 R`000
ASSETS
Non current assets 721,010 539,646
Property, plant & equipment 201,374 190,440
Goodwill and other intangibles 126,066 106,240
Other investments 346,153 134,751
Investments in Associates - 7,110
Biological assets 17,882 16,331
Loans receivable 14,928 60,312
Deferred tax 14,607 24,462
Current Assets 232,764 191,725
Inventory 35,279 27,854
FEC asset 14 38
Non current assets held for sale 40,433 -
Current loans 19,170 5,560
Receiver of Revenue 1,166 466
Trade and other receivables 83,673 117,898
Bank 53,029 39,909
TOTAL ASSETS 953,774 731,371
EQUITY & LIABILITIES
Capital & Reserves
Share capital 29 27
Share premium 386,764 301,408
Non distributable reserves 8,056 10,262
Other distributable reserves - 100
Accumulated profits 166,479 52,252
Equity attributable to parent 561,329 364,049
Outside shareholders interest 29,741 48,643
Total equity 591,070 412,692
Non-current liabilities 155,816 126,046
Long term borrowings 46,833 55,694
Deferred tax 106,911 68,382
Post employment medical costs 2,072 1,970
Current Liabilities 206,888 192,633
Trade & other payables 68,447 58,288
Liabilities held for sale 28,684 -
Income received in advance 6,177 6,817
Policy Holder`s liabilities - 17,323
Contract costs payable - 3,113
Provisions 30,926 10,222
Current portion of long term 27,115 37,509
borrowings
Bank overdraft 29,991 50,774
Receiver of Revenue 15,548 8,587
TOTAL EQUITY & LIABILITIES 953,774 731,371
GROUP INCOME STATEMENT
Audited Audited
Group to Group to
31 August 2007 31 August 2006
R`000 R`000
Revenue 449,516 422,418
Cost of sales (229,016) (238,655)
Gross profit 220,500 183,763
Other operating income 282,903 116,871
Gross income 503,403 300,634
Other operating expenses (317,874) (210,953)
Profit from operations 185,529 89,681
Income from associate (13) 605
Finance (expense)/income (11,413) (3,474)
Profit before tax 174,103 86,812
Tax expense (61,690) (14,907)
Profit/(loss)after tax 112,413 71,905
Attributable to :
Outside shareholders (2,204) 5,646
Parent 114,617 66,259
112,413 71,905
Headline earnings 116,494 65,172
Number of shares in issue 469,205,361 360,675,482
Weighted number of shares in 399,727,904 316,379,170
issue
Diluted number of shares in 416,478,538 357,810,172
issue
Headline earnings/(loss) per 29.14 20.60
share (cents)
Earnings/(loss) per share 28.70 20.94
(cents)
Diluted earnings/(loss) per 27.55 18.52
share (cents)
Net Asset Value per share 119.63 100.94
(cents)
Headline earnings 2007 2006
reconciliation R`000 R`000
Basic earnings 114,726 66,259
Loss on disposal of investment - 26
Contingent liability - (1,300)
Loss/(Profit) on disposal of (214) 16
property, plant and equipment
Loans written off - 171
Impairment of goodwill 1,735 -
Impairment of property, plant 935 -
and equipment
Dividends received (688) -
Headline earnings 116,494 65,172
CASH FLOW STATEMENT
Audited Audited
Group to Group to
31 August 2007 31 August 2006
R`000 R`000
CASH FLOW FROM OPERATING (48,519) (12,153)
ACTIVITIES
CASH FLOWS FROM INVESTING (44,539) (76,610)
ACTIVITIES
CASH FLOWS FROM FINANCING 126,961 37,286
ACTIVITIES
Increase/(Decrease) in cash and 33,903 (51,477)
cash equivalents
Cash and cash equivalents at (10,865) 40,612
beginning of the year
CASH EQUIVALENTS AT THE END OF 23,038 (10,865)
THE YEAR
GROUP STATEMENT OF CHANGES IN EQUITY
Non
distributable
Share capital Share premium reserves
R`000 R`000 R`000
Balance at 26 236,402 8,245
31/08/05
Prior year error - - -
Restated balance 26 236,402 8,245
at
31/08/05
Net profit from - -
Activities
Issue of share 1 65,006
capital
Movement in - - 2,017
reserves
Dividend - -
Acquisition of -
subsidiaries
Balance at 27 301,408 10,262
31/08/06
Prior year error - - -
Restated balance 27 301,408 10,262
at 31/08/06
Net profit from - -
Activities
Issue of share 2 85,356
capital
Transfer from - -
CRRF
Movement in - - (2,206)
reserves
Dividend - -
Acquisition/ - -
(Disposal) of
subsidiaries
Balance at 29 386,764 8,056
31/08/07
GROUP STATEMENT OF CHANGES IN EQUITY (continued)
Other
distributable Accumulated
reserves Profit/(loss) Total
R`000 R`000 R`000
Balance at 487 (13,838) 231,322
31/08/05
Prior year error - (106) (106)
Restated balance 487 (13,944) 231,216
at
31/08/05
Net profit from 67,401 67,401
Activities
Issue of share 65,007
capital
Movement in (387) 1,630
reserves
Dividend (63) (63)
Acquisition of -
subsidiaries
Balance at 100 53,394 365,191
31/08/06
Prior year error (1,142) (1,142)
Restated balance 100 52,252 364,049
at 31/08/06
Net profit from 114,617 114,617
Activities
Issue of share 85,358
capital
Transfer from (8) (8)
CRRF
Movement in (100) (2,306)
reserves
Dividend (382) (382)
Acquisition/
(Disposal) of
subsidiaries
Balance at - 166,479 561,328
31/08/07
GROUP STATEMENT OF CHANGES IN EQUITY (continued)
Minority
interest Total equity
R`000 R`000
Balance at 40,152 271,474
31/08/05
Prior year error - (106)
Restated balance at 40,152 271,368
31/08/05
Net profit from 6,658 74,059
Activities
Issue of share capital 65,007
Movement in reserves 1,630
Dividend (63)
Acquisition of 2,845 2,845
subsidiaries
Balance at 49,655 414,846
31/08/06
Prior year error (1,012) (2,154)
Restated balance at 48,643 412,692
31/08/06
Net profit from (2,204) 112,413
Activities
Issue of share capital 85,358
Transfer from CRRF (8)
Movement in reserves (2,306)
Dividend (382)
Acquisition/ (16,697) (16,697)
(Disposal) of
subsidiaries
Balance at 29,742 591,070
31/08/07
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") including IAS 34, using the historical cost convention except for
certain financial instruments that are stated at fair value and
adjustments, where applicable. The abridged unqualified financial
statements have been audited by the company`s Auditor, PKF (Newlands) Inc.,
whose report is available for inspection at the registered office of the
company.
The basis of preparation is consistent with the prior year.
COMMENTARY
Sekunjalo Investments Limited ("Sekunjalo") has continued to grow in
international and local stature and has once again been in the spotlight on
the world economic stage. In the year under review, the Sekunjalo
Investment Group ("the Group") continued with its strategy to achieve
growth organically, and through acquisitions.
RECENT HIGHLIGHTS
Sekunjalo recently received a number of prestigious awards and accolades.
In particular, the Group was selected as the only South African company to
be a Founding Member of the Top 125 World Economic Forum ("WEF") New World
Champion companies in Dalian, China. Sekunjalo was one of only five
companies on the African continent to receive this recognition and be
included in this prestigious group of international companies.
GROUP PERFORMANCE
During the past financial year, the Group continued to focus on its various
investments within its two main sectors, namely:
- Technology and Innovation Driven Investments; and
- Manufacturing and Resource Driven Investments
Emphasis was placed on ensuring that synergies across these divisions were
effectively leveraged. The Board supports this strategy and believes that
this approach will ensure maximum expansion potential for the Group and
provide for a sustainable growth curve.
The Group`s excellent results in the past year have validated this strategy
and have reinforced Sekunjalo`s track record of consistently showing
excellent performance.
- Operating profit is up 107% to R186m;
- Headline earnings at R117m reflects an increase of 78%; and
- Headline Earnings per share is up 41% to 29 cents
These results are largely due to a much improved performance in Fishing and
to an increasingly solid performance in the Technology and Innovation
driven investments.
REVIEW OF INVESTMENTS
MANUFACTURING & RESOURCE DRIVEN INVESTMENTS
FISHING AND AQUACULTURE
The allocation of long-term rights has brought much needed stability to the
Fishing Industry in South Africa. It is widely acknowledged that we will
see much needed consolidation in the industry.
Premier Fishing`s ("Premier") success in the long-term rights allocation
process is an excellent platform for its aggressive growth strategy.
Building on its current lobster rights, Premier Fishing is one of the
largest lobster fishing companies in the Southern Hemisphere.
Premier`s results have vastly improved on last year`s figures. This is
largely due to (1) cost efficiencies and a favourable rand/dollar exchange
rate resulting in export revenue exceeding 50% of total revenue; (2) a
rollover of West Coast rock lobster quotas from last year; and (3) good
catches of West and South Coast Rock Lobster.
Premier has significantly reduced its long-term debt and is in a good
position to make acquisitions, and facilitate consolidation - particularly
amongst black businesses in the fishing industry.
Furthermore, management continues to seek cost efficiencies in all the
sectors in which Premier operates with a view to improving profitability.
The abalone farm based in Gansbaai continues to deliver steady results. The
decision to invest in aquaculture and create an environmentally sustainable
fishing resource in our country, is now validated by the Government`s move
to close the wild abalone sector. This area of the business is poised for
significant expansion and the Group is currently in discussions to acquire
another farm.
ENTERPRISE DEVELOPMENT
During 2006, the Group identified various actions for business development
in the small and medium enterprises sector and actively pursued
opportunities to partner with various enterprises. In the year ahead, the
Group will continue to focus on strengthening its involvement in Enterprise
Development and commits to supporting previously disadvantaged groups. One
of the more prominent successful investments has been into ESP Afrika, the
owner of the Cape Town International Jazz Festival. This is now the 4th
largest festival of its kind internationally.
TECHNOLOGY AND INNOVATION DRIVEN INVESTMENTS
INFORMATION TECHNOLOGY AND COMMUNICATIONS (ICT)
The Groups ICT businesses are known as Sekunjalo Informatics and
Telecommunications Africa ("SITCA"). During the past year, management has
focused on consolidating the ICT businesses across the group and managing
it as an autonomous Division.
SITCA is a business solutions provider that through its investments, is
focused on:
- providing business intelligence solutions;
- developing and supporting a variety of software products that are custom
designed to meet the objectives of businesses operating in specific
sectors; and
- providing cost effective IT solutions to the health care industry.
The Group is preparing to list the ICT division in the second half of the
next financial year. Management believes that it is prudent to consolidate
and rationalise the businesses to enable it to provide support structures
for the ICT division. The four main operating ICT companies - Synergy,
FIOS, HST and Saratoga performed well and both Synergy and Saratoga
received prestigious ICT awards. Synergy was named the Cognos South African
Reseller Partner of the Year by NY listed Cognos, whilst Saratoga was
acknowledged as a leading innovator of mobile software when it won a DTI
award for its `Shine` Initiative project. `Shine` is a DTI-sponsored
initiative to create service delivery by creating a field-worker
productivity suite for local government and utilities.
FINANCIAL SERVICES
The Group`s financial services interest is held through its wholly-owned
subsidiary, Sekunjalo Capital (Pty) Ltd.
In the past year, Sekunjalo Capital sold its international business to an
international private equity firm based in Mauritius allowing Sekunjalo
Capital to focus on its core South African business.
Sekunjalo Financial Services has developed an integrated financial services
platform through extensive investment in software development. This
platform is able to deal with the complexity of distributing financial
services products.
The strategy going forward is to market directly to established affinity
groups. The business is currently in the process of implementing an
agreement with one of South Africa`s largest Trade Unions. This will:
- populate the business significantly;
- contribute to earnings; and
- provide annuity income from distribution of the products
HEALTHCARE AND PHARMACEUTICALS
Sekunjalo Health Care ("SHC") and its associated health care companies,
have been successful in the past financial year in securing significant
government contracts for medical devices through an open tender process.
The experience of black entrepreneurs in the health care sector is that the
sector continues to be hostile to black-owned business. In our experience,
negligible support has been provided by the private health care sector
despite SHC locally manufacturing commercially superior products on
extremely favourable terms.
This is of concern as the investment the Group has made in the health care
business has enabled it to further penetrate the public sector, but not the
private sector. In addition, this investment was premised on the health
care charter whereby large companies in the health care industry undertook
to procure from black-owned business. We are disappointed that this has not
happened.
As we are uncertain of support from private sector large customers, the
Group has decided to impair the outstanding loan owing by SHC to SIL as an
interim measure and has embarked on a significant and aggressive cost-
cutting exercise.
BIOTECHNOLOGY
Sekunjalo, through African Biotechnological and Medical Innovation
Investments (Pty) Ltd ("ABMI"), owns 49% in Bioclones (Pty) Ltd, the
leading biotechnology company on the African continent and in the
developing world.
Bioclones stature is recognised and enhanced by one of the world`s foremost
biotechnology cell lines companies based in Switzerland, Solidago AG. This
company chose Bioclones as its licensee for GCSF (a cancer treatment drug)
with current global revenues of US$ 5 billion annually. This is the partner
drug to Bioclones` own Repotin (EPO) which is also used in cancer treatment
and kidney failure and which has a current global market of US$ 12 billion.
Bioclones currently has a state-of-the-art EPO facility in Pretoria, SA
which it intends to expand through the proceeds of an international listing
in London or New York.
Bioclones experience in the manufacture of EPO is that its cost structure
in the manufacture and research process will allow it to deliver EPO to the
global market at a far lower cost. During March 2007, Government partnered
with Bioclones via the Biopad Trust, whereby the Biopad Trust invested US$
5,3 million in the upgrading of the GCSF facility in Cape Town and the
licensing with Solidago AG, Switzerland.
GCSF is expected to contribute to Sekunjalo`s global revenues in 18 months
and the facility will be upgraded to meet European and US standards.
Bioclones has recently concluded its clinical trials for one of its other
novel products for the treatment of HIV/Aids. It is Bioclones` intention to
make such drugs affordable to the population of Africa and the poor in
particular. Bioclones is currently valuing its 22 global patents and is
assessing investments in novel drug compounds as well as bio-similar
products with further developments.
GROUP PROSPECTS
Sekunjalo is confident about its prospects. We have formed significant
partnerships with multinational companies in fishing, ICT, health care and
biotechnology.
In fishing, our lobster brand "South Atlantic Lobster" is globally
recognised and we have partnerships in the USA, Asia and Europe. Our farmed
abalone is highly sought after in the Far East. At a recent organic
fertiliser exhibition in the UK, our organic fertiliser "Seagro" and our
kelp products were well received.
In Biotechnology our partnership with Swiss based Solidago AG, has the
potential for us to acquire further licences in this highly lucrative
global industry. We are currently in discussion with two multinational
companies to licence our successful Repotin and GCSF products into the
European, Mid-East and Asian markets.
Our partnerships with global private equity groups based in Mauritius,
Europe and USA are a potentially important contribution to the Group`s
earnings in the years ahead.
Sekunjalo Investment Holdings (Pty) Ltd ("Holdings") only shareholder is
the largest shareholder of Sekunjalo Investments Ltd (SIL). Holdings,
through Sekunjalo Telekom (Pty) Ltd, recently acquired 13% of Nokia Siemens
Networks ("NSN") RSA, by fulfilling the stringent empowerment and other
criteria. Holdings has tabled a memorandum of agreement to SIL whereby SIL
will accrue the full benefit of the NSN RSA investment, subject to
conditions precedent being fulfilled by 31 March 2008 - including the
approval of NSN RSA and NSN Global.
The Group aims to continue to grow & consolidate investments in its two
primary sectors through organic growth and/or targeted acquisitions. The
strategy is to unlock value through separate listings. There are many
opportunities to partner organisations as BEE partners in such
transactions. In this regard, we are targeting the larger blue chip
investments by acquiring minority stakes of up to 30% in various
businesses.
We are aware that this signals a departure from our traditional investment
strategy of holding majority stakes in our various businesses. However, we
believe that the gains for stakeholders in this strategy has the potential
to deliver significant returns on investments.
DIVIDENDS
No dividends have been declared for the current period. The Board continues
to work toward payment of dividends in the foreseeable future and believes
that the Group strategy will deliver significant returns on investment.
Dr MI Surv? M Y Kajee
Executive Chairman CEO
05 December 2007
Cape Town
DIRECTORS
*Dr M Iqbal Surve (Executive Chairman); *Mohamed Y Kajee (CEO); *Khalid
Abdulla; Norman T Noland; *Reverend Vukile Mehana, Mihe Gaomab,The First;
Salim Young; Dianne Case; Zoliswa A Kota *Executive Directors
Registered Address: Sekunjalo House, Block F, The Terraces, Steenberg
Office Park, Tokai, 7945
email: nonqaba@sekunjalo.com
Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 11
Diagonal Street, Johannesburg
Auditors: PKF (Newlands) Inc, Claremont
Sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 05/12/2007 08:12:09 Produced by the JSE SENS Department.
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