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EXL
EXL
EXL - Excellerate Holdings Limited - Unaudited results for the six months ended
31 December 2007
EXCELLERATE HOLDINGS LIMITED
Registration number 1997/009884/06
JSE code: EXL ISIN: ZAE000026092
(Incorporated in the Republic of South Africa)
("Excellerate" or "the Excellerate Group")
Unaudited results for the six months ended 31 December 2007
CONDENSED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Revenue 285 334 272 704 494 802
Gross profit 91 605 83 267 163 410
Operating profit 19 736 16 237 29 324
Gain on disposal of business - - 205
Share of undistributed profits 2 743 1 512 3 548
of associates
Profit before finance charges 22 479 17 749 33 077
and taxation
Net finance costs (1 614) (2 015) (2 483)
Profit before taxation 20 865 15 734 30 594
Taxation (5 296) (4 486) (13 934)
Profit after taxation 15 569 11 248 16 660
Attributable to:
Equity holders of the parent 15 511 11 114 16 582
Minority interest 58 134 78
15 569 11 248 16 660
Shares in issue (000`s) 219 045 176 465 218 895
Weighted average number of 218 930 174 412 192 598
shares in issue (000`s)
Fully diluted weighted average 223 659 224 925 226 053
number of shares in issue
(000`s)
Earnings per share (cents) 7,1 6,4 8,6
Headline earnings per share 7,1 6,4 8,6
(cents)
Fully diluted basic earnings per 6,9 5,0 7,5
share (cents)
Fully diluted headline earnings 6.9 5.1 7.4
per share (cents)
Reconciliation between income
attributable to the equity
holders of the parent and the
headline earnings attributable
to the equity holders of the
parent:
Income attributable to equity 15 511 11 114 16 582
holders of the parent adjusted
for:
- (Profit)/loss on disposal of (39) 12 (76)
property, plant and equipment
and investment in business
- Tax thereon 11 (3) (37)
Headline earnings 15 483 11 123 16 469
CONDENSED GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
R`000 R`000 R`000
ASSETS
Non-current assets 104 159 102 593 101 370
Property, plant and equipment 29 616 25 123 27 440
Investments in associates 469 1 304 462
Intangible assets 55 358 54 956 55 198
Other financial assets 579 548 799
Deferred taxation assets 18 137 20 662 17 471
Current assets 227 830 219 580 212 245
Bank balances and cash 15 113 3 759 22 992
Other current assets 212 717 215 821 189 253
Total assets 331 989 322 173 313 615
EQUITY AND LIABILITIES
Equity and reserves 171 472 155 438 155 617
Equity attributable to equity 170 568 154 536 154 771
holders of the parent
Minority shareholders` 904 902 846
interest
Non-current liabilities 11 877 10 939 11 410
Long-term loans 10 584 9 539 10 575
Deferred taxation liabilities 1 293 1 400 835
Current liabilities 148 640 155 796 146 588
Other current liabilities 132 364 133 196 146 588
Bank overdrafts 16 276 21 166 -
Compulsory convertible - 1 434 -
debenture liability
Total equity and liabilities 331 989 322 173 313 615
Net asset value per share 77,9 87,6 70,7
(cents)
Net tangible asset value per 52,6 56,4 45,5
share (cents)
CONDENSED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Cash flows from operating (19 394) (16 161) 27 680
activities
Cash (utilised)/generated by (13 827) (9 958) 42 503
operations
Net finance costs (1 614) (3 202) (5 104)
Taxation paid (3 953) (3 001) (9 719)
Cash flows from investing (9 253) (3 804) (8 538)
activities
Cash flows from financing 4 492 7 777 9 068
activities
Net (decrease)/increase in cash (24 155) (12 188) 28 210
and cash equivalents
Cash and cash equivalents at 22 992 (5 219) (5 218)
beginning of period
Cash and cash equivalents at end (1 163) (17 407) 22 992
of period
CONDENSED SEGMENTAL REPORT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Revenue 285 334 272 704 494 802
Trading - Distribution 217 110 207 594 364 010
Services 68 224 65 110 130 792
Operating profit 19 736 16 237 29 324
Trading - Distribution 17 946 16 031 24 387
Services 8 996 10 159 21 332
Corporate (7 206) (9 953) (16 395)
Profit before interest and 22 479 17 749 33 077
taxation
Trading - Distribution 17 946 16 043 24 592
Services 11 739 11 659 24 880
Corporate (7 206) (9 953) (16 395)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Ordinary Compulsory Non-
share Share convertible distributable
capital premium debentures reserve
R`000 R`000 R`000 R`000
Balance at 30 June 1 741 50 224 18 641 18 952
2006
Share based payment (356)
transactions
Sale of treasury 24 1 120
shares
Profit for the period
Balance at 31 December 1 765 51 344 18 641 18 596
2006
Balance at 30 June 2 189 65 889 - 18 612
2007
Share based payment 95
transactions
Sale of treasury 1 190
shares
Profit for the period
Balance at 31 December 2 190 66 079 - 18 707
2007
Attributable
to equity
Retained holders Minority
earnings of parent interest Total
R`000 R`000 R`000 R`000
Balance at 30 June 53 076 142 634 768 143 402
2006
Share based payment (356) (356)
transactions
Sale of treasury 1 144 1 144
shares
Profit for the period 11 114 11 114 134 11 248
Balance at 31 December 64 190 154 536 902 155 438
2006
Balance at 30 June 68 081 154 771 846 155 617
2007
Share based payment 95 95
transactions
Sale of treasury 191 191
shares
Profit for the period 15 511 15 511 58 15 569
Balance at 31 December 83 592 170 568 904 171 472
2007
COMMENTARY
FINANCIAL OVERVIEW
The Board is pleased to report to shareholders much improved results for the six
month period from July to December 2007, both in comparison with the previous
six months and the comparative period for the prior year. This is
notwithstanding the prevailing slower retail trading conditions during this
time.
Revenue for the six months rose by R12,6 million or 4,6%, to R285,3 million.
Revenue at Sunkist decreased by R10,9 million for the period as further marginal
trading lines were eliminated. Improving margins together with sound cost
management resulted in net profit attributable to shareholders showing a
pleasing increase to R15,5 million, 39,6% above the comparative period.
Consequently, headline earnings rose by 39,2% over the comparative period to
R15,5 million.
Fully diluted earnings per share increased by 38% to 6,9 cents per share, whilst
fully diluted headline earnings per share increased by 35,3% to 6,9 cents per
share.
Cash flows generated by operations amounted to R23,4 million (R19,3 million for
the comparative period) before taking into account working capital expansion of
R37,2 million (R29,3 million comparative period). Whilst significant working
capital expansion is expected in the group`s peak trading cycle, slower trading
conditions resulted in higher-than-anticipated stock levels at the end of
December. This position is expected to be significantly improved within the next
six months.
Cash flows utilised in investing activities amounted to R9,3 million, most of
which was used for the acquisition of property, plant and equipment. The overall
effect of these items, along with R4,5 million generated by financing activities
and tax and interest payments of R4,0 million and R1,6 million respectively, was
a decrease in cash and cash equivalents amounting to R24,2 million since 30 June
2007. It is expected that cash generation will be stronger in the second half of
the financial year.
OPERATIONAL OVERVIEW
Trading-Distribution
Revenue in the Trading-Distribution segment of the business increased by R9,5
million to R217,1 million despite the decrease in sales in Sunkist. Profit
before tax increased by 7,2% to R14,9 million, before the elimination of inter-
company administration fees and interest.
Foodserv and Goldenmarc achieved moderate sales growth in less buoyant trading
conditions. However, both units expect improved revenues in the second half.
Foodserv incurred some facility expansion costs which affected profitability for
the period under review. The expanded capacity is expected to yield revenue
growth and cost efficiencies going forward.
Sunkist achieved modest trading profits although some costs were incurred in the
further elimination of unprofitable lines. The further reduction of risk in
Sunkist is a continual focus for management.
Services
Revenue in the Services segment of the business increased by R3,1 million to
R68,2 million, although profit before tax improved by 25% to R12,4 million. This
result is calculated prior to the elimination of inter-company administration
fees and interest and before the effect of taxation on income from associates.
This was due mainly to strong cost management at both Interpark and Sterikleen.
Levingers incurred significant costs in centralising its dry cleaning factory
operation which should result in longer-term cost savings due to lower rentals
and elimination of duplicated overheads.
ACQUISITIONS
During the period under review, the Excellerate Group acquired the retail
operations of VIP, Pro Clean and BC dry cleaners, and a 50% interest in a light
infrastructure solutions company, Chattels, at a cost of R6 million and R9,9
million respectively.
The VIP acquisition has more than doubled the retail outlets operated by
Levingers (from 30 to 63), and the addition of these stores is expected not only
to generate additional revenue, but also to result in economies of scale.
Based in Cape Town, Chattels is a significant infrastructure solutions company
in Africa, specialising in flexible infrastructure projects. The company
recently designed and constructed the facilities for the ANC Polokwane
conference and the A1 Grand Prix in Durban, amongst other notable events.
Significant business development and growth is envisaged as the company is
integrated within the Excellerate Group.
The VIP transaction has an effective date of 1 February 2008, whilst the
Chattels transaction has an effective date of 1 November 2007, but is subject to
obtaining Competition Commission approval as a resolutive condition.
Consequently the financial effects and benefits associated with these
acquisitions will only be accounted for in the results for the year ended June
2008.
BLACK ECONOMIC EMPOWERMENT
Excellerate continues to benefit from its association with its empowerment
partners Akenton, the Katanga Group of companies and Ikamva Labantu.
PROSPECTS
Notwithstanding the slower trading environment experienced during the period
under review, our existing business units are well positioned for organic growth
going forward. In addition, it is expected that the current economic environment
will present excellent opportunities for well-priced acquisitions, and the group
intends to aggressively continue its drive growth that fits the group`s
strategic profile.
CONTINGENT LIABILITY
As stated in the annual report at 30 June 2007, a contingent liability has been
noted for several years in respect of amounts claimed by SARS as owing by
Excellerate in respect of SARS disallowing certain trademark allowances against
taxable income. It was further stated that Excellerate had made a proposal to
SARS for reaching a financial settlement. The Board is pleased to advise that a
final settlement in this matter is imminent. The Company has fully provided for
an amount which it believes appropriate in the circumstances. The remainder of
the disputed amount will continue to be disclosed as a contingency until the
matter is finalised.
ACCOUNTING POLICIES
The condensed interim financial statements for the six months ended 31 December
2007 have been prepared in accordance with International Financial Reporting
Standards ("IFRS") applying IAS34: Interim Financial Reporting. The accounting
policies used to prepare the interim results are consistent with those applied
in the previous period.
DIVIDEND
As the group pursues opportunities to grow by acquisition and reduce interest-
bearing borrowings, the directors have decided not to declare a dividend at this
time.
For and on behalf of the Board
G Hulley
Chief Executive Officer
Sandton
28 February 2008
DIRECTORS
Gordon Hulley Chief executive officer
Harold Bloch Executive director
Peter Kramer Executive director
Alan Lipchin Executive director
Athol Stewart Executive director
Rob Owens Executive director
Rudi Stumpf Non-executive director
Clive Howell Non-executive director
(alternate to Graham Davel)
Graham Davel Non-executive director
Michael Mohohlo Non-executive director
SHARE TRANSFER SECRETARY
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Tel: (+27 11) 370 5000
Fax: (+27 11) 688 7721
COMPANY SECRETARY
ER Goodman Secretarial Services CC
(represented by E Goodman)
2nd Floor, Palm Grove, Grove City
196 Louis Botha Avenue
Houghton
Tel: (+27 11) 728 0742
Fax: (+27 11) 728 4226
email: ergoodmn@netactive.co.za
REGISTERED OFFICE
1st Floor
Atholl Square
Corner Katherine Street and Wierda Road East
Sandown 2196
P O Box 785448, Sandton 2146
Tel: (+27 11) 523 2980
Fax: (+27 11) 523 2990
E-mail: info@excellerate.co.za
Date: 28/02/2008 15:27:01 Produced by the JSE SENS Department.
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