| Fri 22 May 2009, 10:39 | | CCI - CIC Holdings - Reviewed results for the year ended 28 February 2009 |
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CCI
CCI
CCI - CIC Holdings - Reviewed results for the year ended 28 February 2009
CIC Holdings Limited
(Incorporated in the Republic of Namibia)
(Registration number 95/502)
(Registered as an external company in the Republic of South Africa)
(Registration number 1996/002672/10)
Share code: CCI & ISIN: NA0009174278
("CIC" or "Group")
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
Key Information
- Strong revenue growth
- Headline earnings of 20.6 cents per share
- Dividend of 5.5 cents per share
COMMENTARY
The majority of the Group`s income streams for the period emanated from
countries outside of South Africa. Strong top line sales growth has
continued, with a combination of volume and inflation growth for the period.
Cost pressures linked to inflation remains a cause for concern in most of the
businesses. In order to meet customer service expectations, disproportional
cost increases were added to all businesses due to higher distribution costs.
All categories of products which make up the core agency business, including
fast moving consumer goods, tobacco products and alcoholic beverages,
performed well. The staffing solutions business performed in line with
expectations.
RESULTS
The Group changed its financial year end from 30 June to the last day of
February during the previous reporting period. As result thereof, comparative
numbers for the previous year are for an 8 month period compared to a 12 month
period for the current financial reporting period.
Total revenue for the 2009 financial year end was N$2 259 million, exceeding
the N$2 billion mark for the first time in the agency business. Operating
profit margins improved from 2,69% to 3,11%. This was mainly due to a better
category mix, as well as opportunities to capitalise on strategic buying
against price increases during the year.
Attributable profit to Group shareholders increased by 129% to N$46,8 million
compared to an 8 month attributable profit of N$20,4 million for the 2008
financial year. The profit improvement was as a result of all round good
performances from existing businesses as well as the new investments in South
Africa and the increased shareholding in Ocean Traders International.
Headline earnings per share attributable to shareholders increased from 8,4
cents to 18,6 cents on a fully diluted basis, up 121,4% over the prior period.
A total of 50 million new shares were issued pursuant to the listing of CIC on
the AltX during the previous reporting period resulting in an increase in the
total issued shares of the Group in the prior reporting period. The weighted
average number of shares in issue calculated at the end of February 2009,
increased to 226 992 416 shares which now reflects the full issue of the
aforementioned shares in the prior period.
The Balance Sheet reflects the increased working capital requirements due to
the increased turnover and the price increases during the year that resulted
in higher inventory, debtors and creditor values. This together with
strategic stock purchasing, resulted in higher working capital levels at the
end of February 2009. This resulted in cash and cash equivalents decreasing
from N$80,8 million to N$43,4 million.
The net asset value per share increased from 74.3 cents to 91.0 cents per
share.
REGIONAL REVIEW
SOUTH AFRICA
The strategic move of the staffing solutions business ("LSC") into
hospitality, together with the acquisition of the Foundation Group that
operates in the same market segment, added significant critical mass to the
business. The technical staffing market has also seen good growth with a
number of construction companies added to the customer list. LSC`s venture
into the Botswana market over a year ago has proved to be a successful one
with encouraging results with a number of new accounts gained.
The investment in Vital Merchandising Services during 2007 has contributed
positively to this period`s results. This was followed by the purchase of a
shareholding in Focus Retail Services in the Western Cape. A further
investment was made in Natal Sales and Merchandising in KwaZulu-Natal during
2008. These three businesses fulfil the strategic imperative of entering the
sales and merchandising market, representing blue chip manufacturers and
servicing the wholesale and retail customers within South Africa. The
wholesale and retail trade, mainly the grocery market, that these businesses
service has shown that there has been some resilience to the buying of branded
consumer goods products. However, we believe that there may be some weakening
in these categories as consumers move into less expensive food products and
reduce spending in higher value non-food items, namely in homecare and
consumer toiletry markets.
SWAZILAND / MOZAMBIQUE - OCEAN TRADERS INTERNATIONAL ("OTI")
OTI has delivered satisfactory results for the year under review. The
alcoholic beverage portfolio continued to improve top line sales growth, with
particularly pleasing results coming from the premium beer brands. The fast
moving consumer goods portfolio had a successful year with good top line
growth in all categories. New warehousing facilities were opened in Maputo,
Beira and Nampula in Mozambique, in order to better service customers in this
vast country. A number of new principals adding critical mass were introduced
to the portfolio during the year.
OTI has become a significant player in the agency business within Mozambique.
The Mozambique economy is expected to continue to grow and the company is well
placed to capitalise on the momentum of strong top line growth through
existing principals as well as potential new principals.
NAMIBIA / BOTSWANA
The businesses have performed above expectation for the period. Margins have
continued to come under pressure, particularly linked to the costs of
distribution, in order to maintain service levels to customers. This has to a
large extent been offset by strong top line growth and significant upside in
profitability as businesses capitalised on buying in stock against price
increases. Cost focus has become a key issue and a number of cost innovation
plans will be implemented in order to manage transport costs into outlying
areas, as well as factory gate collections and load consolidation within South
Africa. These businesses face the challenge of protecting their margins, which
are the lowest in the group.
Whilst these businesses have delivered stellar performances, a phase of a
possible reduction of inflation and a slowdown in consumer spending, may see
new challenges on the horizon to protect margins in the year ahead.
PROSPECTS
There has been a significant change in the business landscape during the past
six months, since the half-year results were published. The Group has to a
large degree not been as adversely affected and although the next six months
are seen as an interesting period going forward we are of the opinion that CIC
has a good portfolio of businesses that could deliver sustainable performance.
However, provided that there are no further significant downturns within the
markets that we operate in.
Namibia has developed strong trading links with Angola on many consumer
products, and as the Angolan port congestion continues, there will be growth
for the foreseeable future. Botswana is experiencing a severe downturn linked
to the diamond mining slump and the business unit`s management will have to
work extremely hard to drive up the top line and contain costs.
There is optimism that the Mozambique business has considerable upside
potential and that the Group`s investments in South Africa are promising for
the future. The South African agency businesses should hold their own as they
have a good blue chip principal base and will also continue to look for new
principals that will be a strategic long term fit.
The challenge will always be, to maintain a balanced portfolio of businesses
that can shield the Group from any significant short-term downside.
The Board of Directors continues to review and evaluate new acquisitions
within Sub-equatorial Africa, to protect and grow profit streams for the
future.
For and on behalf of the board
TP Rogers FW Britz
Chief Executive Officer Chief Financial Officer
22 May 2009
CONDENSED GROUP INCOME STATEMENTS
28 FEBRUARY 2009
REVIEWED AUDITED
12 months 8 months
ended ended
28/02/2009 29/02/2008 Change
N$`000 N$`000 %
Revenue 2,258,977 1,248,739 80.9
Profit from operations 70,285 33,552 109.5
Depreciation 8,263 4,135 99.8
Net finance expense (1,565) (1,167) 34,1
Share of profit of
equity accounted investees 8,726 4,574 90.8
Profit before tax 69,183 32,824 110.8
Tax 20,270 9,352 116.7
Profit for the period 48,913 23,472 108.4
Attributable to:
Equity holders of the company 46,835 20,418 129.4
Minority interest 2,078 3,054 (32.0)
48,913 23,472 108.4
Reconciliation of headline earnings
Profit for the period 48,913 23,472
Non - trading items
- capital profit (66) (129)
- capital loss 54 1,500
Plus : tax on the above items 5 43
Headline earnings 48,906 24,886 96.5
Headline earnings attributable to:
Equity holders of the company 46,821 21,119 121.7
Minority interest 2,085 3,767 (44.7)
48,906 24,886 96.5
Earnings per ordinary share
Weighted average - cents 20.6 10.4 98.1
Diluted - cents 19.9 9.7 105.2
Fully diluted - cents 18.6 8.1 129.6
Headline earnings per ordinary share
Weighted average - cents 20.6 10.8 90.7
Diluted - cents 19.9 10.0 99.0
Fully diluted - cents 18.6 8.4 121.4
Dividends per ordinary share (cents) 5.5 3.5
Number of ordinary shares
Weighted average 226,992 195,550
Diluted 234,962 210,790
Fully diluted 252,188 252,188
CONDENSED GROUP STATEMENTS OF CHANGES IN SHAREHOLDERS` EQUITY
28 FEBRUARY 2009
REVIEWED AUDITED
12 months 8 months
ended ended
28/02/2009 29/02/2008
N$`000 N$`000
Balance at beginning as previously reported 190,674 146,276
Share option reserve 342 1,415
Shares issued - 47,263
Shareholding increased in subsidiary (5,015) (20,574)
Shareholding decreased in subsidiary 4,358 -
Translation of foreign entities 1,575 2,407
Options exercised 298 (1,244)
Net profit for the period 48,913 23,472
Ordinary dividends (8,026) (8,341)
Balance at end of the period 233,119 190,674
Comprising:
Share capital 228 227
Share premium 129,631 129,334
Share option reserve 3,866 3,586
Accumulated profit 97,018 57,075
Translation of foreign entities (1,210) (2,751)
Minority interest 3,586 3,203
233,119 190,674
CONDENSED GROUP BALANCE SHEET
28 FEBRUARY 2009
REVIEWED AUDITED
12 months 8 months
ended ended
28/02/2009 29/02/2008
N$`000 N$`000
ASSETS
Non-current assets 130,657 95,281
Property, plant and equipment 28,761 24,766
Intangible assets 33,773 33,658
Deferred tax 9,236 8,285
Investments in equity accounted investees 54,668 28,572
Other non-current receivables 4,219 -
Current assets 483,960 392,733
Inventories 201,735 105,591
Trade and other receivables 213,188 196,918
Loan to equity accounted investees 4,033 3,105
Taxation 1,301 1,657
Cash and cash equivalents 63,703 85,462
Total assets 614,617 488,014
EQUITY AND LIABILITIES
Capital and reserves attributable to
equity holders 229,533 187,471
Issued capital 129,859 129,561
Reserves 99,674 57,910
Minority interest 3,586 3,203
Total equity 233,119 190,674
Non-current liabilities 30,049 30,919
Interest-bearing borrowings 13,185 17,324
Deferred tax 393 594
Deferred operating lease liabilities 13,570 13,001
Non-current provision 2,901 -
Current liabilities 351,449 266,421
Current portion of interest-bearing borrowings 9,166 7,117
Current portion of deferred operating lease
liabilities 867 849
Accounts payable and accrued liabilities 295,473 226,963
Subsidiary purchase consideration payable 15,869 22,605
Taxation 9,738 4,246
Bank overdraft 20,336 4,641
Total equity and liabilities 614,617 488,014
Net asset value per share (cents) 91.0 74.3
Net tangible asset value per share 77.6 61.0
CONDENSED GROUP CASH FLOW STATEMENT
28 FEBRUARY 2009
REVIEWED AUDITED
12 months 8 months
ended ended
28/02/2009 29/02/2008
N$`000 N$`000
Cash generated by operations 73,949 37,596
Change in working capital (41,915) (22,260)
Net finance (expense)/income (1,686) 160
Dividends received 2,736 -
Dividends paid (7,966) (8,302)
Taxation paid (15,574) (8,504)
Cash inflow/(outflow) from operations 9,544 (1,310)
Investment to maintain operations: (9,700) (8,706)
- Additions to intangible asset - (251)
- Additions to property, plant and equipment (10,727) (8,712)
- Proceeds on disposal of property, plant and
equipment 1,027 257
Investments in equity accounted investees (26,083) (3,605)
Proceeds on disposal of interest in subsidiary 462 -
Investment in subsidiaries (8,581) (25,195)
Cash outflow from investing activities (43,902) (37,506)
Proceeds on shares issued 298 47,263
Net movement in borrowings (3,394) 5,154
Cash flows from financing activities (3,096) 52,417
Net movement in cash and cash equivalents (37,454) 13,601
Cash and cash equivalents at beginning of period 80,821 67,220
Cash and cash equivalents at end of period 43,367 80,821
GROUP SEGMENT REPORT
For the 12 months ended 28 February 2009
GEOGRAPHIC SEGMENTATION
Namibia and Botswana
2009 2008
N$`000 N$`000
Revenue 1,792,585 981,137
Attributable earnings 25,827 10,937
Capital expenditure 6,723 8,341
Segment assets and
liabilities
- Assets 411,319 302,982
- Liabilities (294,712) (258,696)
- Inter-group balances (48,237) (47,342)
South Africa Swaziland and Mozambique
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue 267,191 190,269 199,201 77,333
Attributable earnings 5,301 7,181 10,098 3,378
Capital expenditure 1,971 535 1,888 14
Segment assets and
liabilities
- Assets 122,329 108,577 44,028 12,389
- Liabilities (69,893) (84,114) (6,390) (4,617)
- Inter-group balances 7,573 (7,471) (19,780) (256)
Group services Total
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue - - 2,258,977 1,248,739
Attributable earnings 5,609 (1,078) 46,835 20,418
Capital expenditure 145 73 10,727 8,963
Segment assets and
liabilities
- Assets 36,941 64,066 614,617 488,014
- Liabilities (10,503) 50,087 (381,498) (297,340)
- Inter-group balances 60,444 55,069 - -
OPERATIONAL SEGMENTATION
Agency divisions Staffing solutions
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue 2,115,432 1,117,417 143,545 131,322
Attributable earnings 38,005 19,386 3,221 2,110
Capital expenditure 8,824 8,257 1,758 633
Segment assets and
liabilities
- Assets 571,751 388,946 34,457 35,002
- Liabilities (435,309) (320,061) (24,662) (27,366)
Group services Total
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue - - 2,258,977 1,248,739
Attributable earnings 5,609 (1,078) 46,835 20,418
Capital expenditure 145 73 10,727 8,963
Segment assets and
liabilities
- Assets 8,409 64,066 614,617 488,014
- Liabilities 78,473 50,087 (381,498) (297,340)
MATERIAL EQUITY TRANSACTION
The group disposed of a 26% interest in Labour Supply Chain (Pty) Limited
("LSC") on 1 March 2008. The purchase consideration receivable in respect of
the shareholding sold amounted to N$4,3 million which is subject to certain
profit warranties that must be achieved by LSC during the two financial years
ending 28 February 2010. The turnover and net profit after tax for LSC for the
financial year ended 28 February 2009 was N$135 million and N$2,6 million
respectively. The net asset value of LSC at the effective date was N$4,5
million. As LSC remained a subsidiary of CIC the transaction was treated as an
equity transaction in terms of IAS 27.
INVESTMENT IN EQUITY ACCOUNTED INVESTEE
Effective 1 March 2008, CIC acquired a 48% interest in the share capital of
Four Rivers Trading 349 (Pty) Limited ("FRT"), trading as Natal Sales &
Merchandising and VMS Kwazulu-Natal. The acquisition was made by a 52% held
subsidiary company of CIC, namely Thembeka Merchandising Holdings (Pty)
Limited, giving CIC an effective 25% stake in FRT. The original purchase
consideration payable for the 48% shareholding was N$14,9 million.
Basis of preparation and accounting policies
The condensed financial statements have been prepared in terms of
International Financial Reporting Standards ("IFRS"), IAS 34 - Interim
Financial Reporting and in compliance with the Listing Requirements of the JSE
Limited. The accounting policies used in the preparation of the condensed
financial statements are consistent with those used in the Annual Financial
Statements for the period ended 29 February 2008.
Independent review
The company`s auditors, Grant Thornton Neuhaus, have reviewed the condensed
financial statements for the 12 months ended 28 February 2009. A copy of their
unqualified review opinion is available on request at the company`s registered
office
Dividend
The directors are pleased to announce that they have declared a final dividend
of 5.5 cents per share on 12 May 2009.
Shareholders are further advised that non-resident shareholders` tax ("NRST")
of 10% is deductible by CIC from any dividend distributed by CIC to its
shareholders who are non-resident in Namibia and who do not carry on business
in Namibia.
The salient dates for the payment of this dividend are set out below:
Last date to trade cum dividend Friday, 26 June 2009
Trading ex dividend commences Monday, 29 June 2009
Records date Friday, 3 July 2009
Payment date Monday, 6 July 2009
Share certificates may not be dematerialised or rematerialised between
Monday, 29 June 2009 and Friday, 3 July 2009, both dates inclusive.
Registered office
Corner of Iscor and Solingen Streets
Northern Industrial Area, Windhoek
(PO Box 98, Windhoek, Namibia)
Registered as an external company in the Republic of South Africa
Tuscany Office Park, Block 5
Coombe Place
Rivonia
(PO Box 3581, Rivonia, 2128)
Tel: 011 8070109
Fax: 011 8071316
Transfer Secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Designated adviser
Questco Sponsor (Pty) Limited
Corporate adviser
PSG Capital (Pty) Limited
Directorate
BH Kent (Chairman)*, TP Rogers (Chief Executive Officer), EHT Angula*#,
FW Britz, H-B Gerdes *#, JA Holtzhausen*, P Malan*
* - Non-executive, # - Namibian Citizen
Company Secretary
JFB Smit
Business address
Tuscany Office Park, Block 5
Coombe Place, Rivonia
Date: 22/05/2009 10:39:01 Produced by the JSE SENS Department.
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