| Tue 29 Sep 2009, 16:34 | | EXL - Excellerate Holdings - Reviewed Consolidated Results for the Year Ended |
|
EXL
EXL
EXL - Excellerate Holdings - Reviewed Consolidated Results for the Year Ended
30 June 2009
EXCELLERATE HOLDINGS LIMITED
Registration number 1997/009884/06
JSE code: EXL
ISIN: ZAE000026092
(Incorporated in the Republic of South Africa)
("Excellerate" or "the Group")
Reviewed consolidated results for the year ended 30 June 2009
HIGHLIGHTS
- Revenue growth of 15.4% over prior year
- Operating cash flow up 12.1% to R44.0 million
- Earnings per share stable for the year
- Major acquisitions implemented, with positive contribution to the Group
PROVISIONAL CONDENSED INCOME STATEMENT
for the year ended 30 June
Reviewed Audited
2009 2008
R`000 R`000
Revenue 678 054 587 406
Cost of sales (465 302) (385 714)
Gross profit 212 752 201 692
Operating expenditure (167 576) (157 675)
Selling and distribution expenses (33 068) (30 745)
Administrative expenses (86 446) (81 454)
Other expenses (48 062) (45 476)
Profit before interest and taxation 45 176 44 017
Finance income 5 378 6 149
Finance costs (10 404) (7 803)
Profit before taxation 40 150 42 363
Taxation - current (7 525) (8 330)
- deferred (3 120) (4 623)
Taxation on dividend paid - STC (696) (50)
Profit for the year 28 809 29 360
Attributable to:
Equity holders of the parent 28 607 28 925
Minority interest 202 435
28 809 29 360
Earnings per share (cents) 13.0 13.2
Diluted earnings per share (cents) 12.8 12.9
Headline earnings per share (cents) 11.9 13.2
Diluted headline earnings per share (cents) 11.7 12.9
PROVISIONAL CONDENSED BALANCE SHEET
at 30 June
Reviewed Audited
2009 2008
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 71 506 35 981
Intangible assets 106 147 74 017
Amount owing by joint venture partner 306 5 169
Long term receivable - 307
Finance lease receivables 560 880
Deferred taxation 10 213 12 307
188 732 128 661
Current assets
Inventories 95 025 103 354
Trade and other receivables 139 022 118 097
Current portion of finance lease receivables 1 238 584
Amounts owing by joint venture partners 13 449 2 423
Taxation receivable 8 455 4 583
Other financial instruments - 51
Cash and cash equivalents 21 845 49 989
279 034 279 081
Total assets 467 766 407 742
EQUITY AND LIABILITIES
Share capital 2 173 2 190
Share premium 64 687 66 078
Share-based payment reserve 1 733 1 830
Retained earnings 133 929 112 022
Equity attributable to equity holders
of the parent 202 522 182 120
Minority interest 985 783
Total equity 203 507 182 903
Non-current liabilities
Deferred taxation 6 977 1 747
Interest bearing debt 18 788 20 039
25 765 21 786
Current liabilities
Trade and other payables 184 286 172 057
Amounts owing to joint venture partners 12 473 9 494
Vendors for acquisitions 12 978 6 754
Taxation payable 14 427 9 790
Current portion of interest bearing debt 13 342 4 873
Other financial instruments 909 85
Shareholders for dividends 79 -
238 494 203 053
Total equity and liabilities 467 766 407 742
Net asset value per share (cents) 93.2 83.1
Net tangible asset value per share (cents) 44.3 49.4
Calculation of earnings per share
Shares in issue (number of shares) 217 329 219 045
Weighted average shares in issue
(number of shares) 219 211 219 004
Diluted weighted average shares in issue
(number of shares) 223 846 224 174
Earnings per share (cents) 13.0 13.2
Diluted earnings per share (cents) 12.8 12.9
Headline earnings per share (cents) 11.9 13.2
Diluted headline earnings per share (cents) 11.7 12.9
The following adjustments to profit attributable to
shareholders were taken into account in the
calculation of headline earnings:
Attributable to equity holders of the parent 28 607 28 925
- negative goodwill realised (2 498) -
- impairment of assets - 5
- gain on disposal of business - (62)
- loss/(profit) on sale of property,
plant and equipment 113 (38)
- taxation effects of adjustments (32) 27
Headline earnings 26 190 28 857
PROVISIONAL CONDENSED CASH FLOW STATEMENT
for the year ended 30 June
Reviewed Audited
2009 2008
R`000 R`000
Cash flows from operating activities 44 039 39 296
Cash generated by operations 65 313 56 200
Finance income 3 919 2 606
Finance costs (10 013) (7 181)
Dividend paid (6 718) (498)
Taxation paid (8 462) (11 831)
Cash flows from investing activities (66 874) (13 957)
Additions to property, plant and equipment
- to expand (10 826) (5 576)
- to maintain (7 537) (8 122)
Additions to intangible assets (2 301) (820)
Proceeds on disposal of property, plant
and equipment 161 1 114
Acquisition of businesses (46 371) (3 426)
Proceeds on disposal of business - 2 873
Cash flows from financing activities (5 309) 1 161
Interest bearing debt raised 4 183 6 057
Interest bearing debt repaid (4 873) (3 998)
Receipt of long term receivable 307 492
(Increase)/decrease in amounts owing by
joint venture partners (6 163) 4 177
Increase/(decrease) in amounts owing to
joint venture partners 2 979 (6 078)
Shares repurchased (1 908) -
(Decrease)/increase in finance lease receivables (334) 321
Sale of treasury shares 500 -
Employee share options exercised - 190
(Decrease)/increase in cash
and cash equivalents (28 144) 26 500
Cash and cash equivalents at beginning of year 49 989 23 489
Cash and cash equivalents at end of year 21 845 49 989
PROVISIONAL CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June
Non- Share-based
Share Share distributable payment
capital premium reserves reserve
R`000 R`000 R`000 R`000
Balance at 30 June
2007 2 189 65 889 18 612 -
Profit for the year
Transfer to
share-based
payment reserve (1 735) 1 735
Transfer to retained
earnings (16 877)
Dividend to minority
shareholders
Share-based payment
transactions 95
Sale of treasury shares 1 189
Balance at 30 June
2008 2 190 66 078 - 1 830
Profit for the year
Share-based payment
transactions (97)
Sale of treasury shares 5 495
Repurchase of shares (22) (1 886)
Dividend paid
Balance at 30 June
2009 2 173 64 687 - 1 733
Attributable to
Retained equity holders Minority
earnings of the parent interest Total
R`000 R`000 R`000 R`000
Balance at 30 June
2007 66 220 152 910 846 153 756
Profit for the year 28 925 28 925 435 29 360
Transfer to
share-based
payment reserve - -
Transfer to retained
earnings 16 877 - -
Dividend to minority
shareholders - (498) (498)
Share-based payment
transactions 95 95
Sale of treasury shares 190 190
Balance at 30 June
2008 112 022 182 120 783 182 903
Profit for the year 28 607 28 607 202 28 809
Share-based payment
transactions 97 - -
Sale of treasury shares 500 500
Repurchase of shares (1 908) (1 908)
Dividend paid (6 797) (6 797) (6 797)
Balance at 30 June
2009 133 929 202 522 985 203 507
PROVISIONAL CONDENSED SEGMENTAL REPORT
for the year ended 30 June
Trading-
Services distribution
R`000 R`000
2009
Revenue (external) 318 284 356 057
Revenue (internal) 30 424 638
348 708 356 695
Profit/(loss) before interest and taxation 38 249 10 182
Depreciation expense (11 256) (3 482)
Amortisation of intangibles - -
Negative goodwill realised - -
Finance income 5 411 5 909
Finance costs (3 016) (3 716)
2 395 2 193
Profit/(loss) before taxation 40 645 12 374
Taxation (11 766) (3 465)
Additions to property, plant and equipment 15 644 2 522
Segment assets 262 997 223 891
Segment liabilities (178 721) (79 051)
Segment equity (84 276) (144 840)
Cash flow from operating activities 42 096 15 973
Cash flow from investing activities (62 903) (2 507)
Cash flow from financing activities 3 084 1 230
2008
Revenue (external) 196 488 390 918
Revenue (internal) 477 8 681
196 965 399 599
Profit/(loss) before interest and taxation 26 102 23 735
Depreciation expense (5 539) (3 820)
Amortisation expense (127) -
Finance income 4 052 6 170
Finance costs (1 530) (5 244)
2 522 926
Profit/(loss) before taxation 28 624 24 661
Taxation (8 064) (6 906)
Additions to property, plant and equipment 9 843 3 794
Segment assets 199 331 240 821
Segment liabilities (118 501) (99 034)
Segment equity (80 830) (141 787)
Cash flow from operating activities 25 540 22 893
Cash flow from investing activities (13 334) (583)
Cash flow from financing activities (8 943) 10 543
1. Reconciliations of prior year assets and equity
1.1 Segmental assets
Per prior year segmental 187 764 224 285
Notional dividends 11 567 16 536
199 331 240 821
1.2 Segmental equity
Per prior year segmental (69 263) (125 251)
Notional dividends (11 567) (16 536)
(80 830) (141 787)
Corporate Total
R`000 R`000
2009 674 341 (2)
Revenue (external) -
Revenue (internal) 8 938 40 000
8 938 714 341
Profit/(loss) before interest and taxation (3 255) 45 176
Depreciation expense (225) (14 963)
Amortisation of intangibles (1 421) (1 421)
Negative goodwill realised 2 498 2 498
Finance income 5 249 16 569 (3)
Finance costs (14 863) (21 595) (4)
(9 614) (5 026)
Profit/(loss) before taxation (12 869) 40 150
Taxation 3 888 (11 341)
Additions to property, plant and equipment 197 18 363
Segment assets (19 122) 467 766
Segment liabilities (6 487) (264 259)
Segment equity 25 609 (203 507)
Cash flow from operating activities (14 030) 44 039
Cash flow from investing activities (1 464) (66 874)
Cash flow from financing activities (9 623) (5 309)
2008
Revenue (external) - 587 406 (2)
Revenue (internal) 7 999 17 157
7 999 604 563
Profit/(loss) before interest and taxation (5 820) 44 017
Depreciation expense (266) (9 625)
Amortisation expense - (127)
Finance income 2 015 12 237 (3)
Finance costs (7 117) (13 891) (4)
(5 102) (1 654)
Profit/(loss) before taxation (10 922) 42 363
Taxation 1 967 (13 003)
Additions to property, plant and equipment 61 13 698
Segment assets 23 796 463 948 5
Segment liabilities (7 304) (224 839)
Segment equity (16 492) (239 109)
Cash flow from operating activities (9 137) 39 296
Cash flow from investing activities (40) (13 957)
Cash flow from financing activities (439) 1 161
1. Reconciliations of prior year assets and equity
1.1 Segmental assets
Per prior year segmental (4 307) 407 742
Notional dividends 28 103 56 206
23 796 463 948
1.2 Segmental equity
Per prior year segmental 11 611 (182 903)
Notional dividends (28 103) (56 206)
(16 492) (239 109)
Notional dividends, appearing on the management accounts, are considered to be
adjustments against the equity of group companies, and not against short term
subsidiary loans, as they were previously classified.
2009 2008
Reconciliations R`000 R`000
2. Revenue
Total revenue per reportable segments 714 341 604 563
Elimination of inter-segment revenue (40 000) (17 157)
Joint venture management fee not included for
financial reporting purposes 3 713 -
Consolidated revenue 678 054 587 406
3. Finance income
Total finance income per reportable segments 16 569 12 237
Elimination of inter-segment finance income (11 191) (6 088)
Consolidated finance income 5 378 6 149
4. Finance costs
Total finance cost per reportable segments (21 595) (13 891)
Elimination of inter-segment finance cost 11 191 6 088
Consolidated finance cost (10 404) (7 803)
5. For the purpose of internal performance management, certain related party
loans and cash have been treated as segmental equity.
COMMENTARY
REVIEW OF THE YEAR
In the context of a difficult prevailing economic environment, the Excellerate
Board is pleased to report a sound performance by the Group, with stable
profitability supported by a strong operating cash flow performance.
The 2009 financial year has been both challenging and rewarding for the Group.
Whilst the current economic environment has had an impact on the Group`s
operations, management has focused on the integration of recent acquisitions
into the Group and on the streamlining and rationalisation of existing
operations. As in the past, the Group has continued to aggressively drive
working capital management and target healthy operating cash flow generation.
In this environment, we have adopted an appropriately prudent approach to
business valuations, and, consequently, acquisition activity has been limited.
Maintaining profit margins within our trading division has been a significant
challenge due to its heavy reliance on the retail environment. This has been
most evident for Goldenmarc which primarily trades in the general merchandise
category within the retail division which has experienced significant volume
decreases within the year. The situation has however afforded opportunity for
our trading businesses to critically analyse their operations, rationalise
fixed costs, and improve procurement and sales processes. In this regard,
significant progress has been made in ensuring that these business units are
adequately equipped to deal with either a protracted slow down or rapid market
rebound.
In terms of size, the most material acquisition that has been implemented
during the year has been that of an interest in Vital Distribution Solutions
and related businesses consisting of Vital Fleet and Staffing Logistics. These
businesses have been consolidated into the Group results with effect from 1
October 2008. The integration process has gone well, and the underlying
financial performance of these businesses has made a significant positive
impact for the Group.
The Group remains both operationally and financially sound and is well placed
to improve performance in the year ahead.
FINANCIAL OVERVIEW
Results for the year ended 30 June 2009 are stable, but have been significantly
affected by the prevailing market conditions which have had particular impact
on the trading division within the Group. However, notwithstanding pressure on
operating margins and net profits, the Group achieved exceptional cash
generation from operations.
Group revenue for the year increased by 15.4% to R678 million (2008: R587
million), despite the impact of lower volumes experienced within the trading
division. Gross and operating profit margins have come under pressure, a
consequence of the more challenging trading environment, resulting in a nominal
increase in profit before interest and taxation of 2.6% to R45.2 million (2008:
R44.0 million).
Net finance costs increased by R3.4 million to R5.0 million as a result of
higher average interest rates, finance costs within businesses acquired and
non-cash interest on acquisitions and working capital, calculated in accordance
with IFRS. Net cash finance costs increased by only R1.5 million, this increase
being primarily related to asset-based finance. Profit before taxation declined
by 5.2% to R40.2 million (2008: R42.4 million).
Profit after taxation for the year showed a decline of R0.6 million to R28.8
million (2008: R29.4 million), a decrease of 1.9% over the comparative period.
Earnings per share and diluted earnings per share remained practically
unchanged at 13.0 cents (2008: 13.2 cents), and 12.8 cents (2008: 12.9 cents),
respectively.
Once again, cash generation has been a highlight of the Group`s results, with
cash generated by operations increasing by 16.2% to R65.3 million (2008:
R56.2 million).
Cash flows from operating activities after net finance costs and taxation paid
but before dividend paid rose by 27.5% to R50.8 million (2008: R39.8 million),
representing 176.2% of profit after taxation.
After paying dividends of R6.7 million, cash flows from investing activities of
R66.9 million, and financing activities of R5.3 million, the Group still
retained cash and cash equivalents at the end of the year amounting to R21.8
million (2008: R50.0 million).
Excellerate`s balance sheet remains strong, with limited gearing. Total assets
have increased by 14.7% to R467.8 million (2008: R407.7 million), whilst
interest bearing debt rose by R7.2 million to R32.1 million (2008: R24.9
million).
Consequently the Group is well-placed to access any funding required to fulfil
further growth ambitions.
REVIEW OF OPERATIONS
Trading division, including Goldenmarc, Foodserv, Ferrengi, Nu-Africa Comm
Trading and Sunkist
Divisional revenue for the period declined by R42.9 million to R356.7 million
for the year.
Particularly hard hit was Goldenmarc, a significant contributor to this
division, whose revenues reduced by R14.4 million to R153.4 million for the
year, whilst Foodserv and Ferrengi remained relatively flat on the prior year.
Operations and product lines at Sunkist were further rationalised with a view
to a disposal or part disposal in the new financial year. Revenue at Sunkist
consequently declined by R21.1 million to R23.6 million.
In addition to the reduction in revenues, the trading division also experienced
margin pressures, primarily at Goldenmarc, which negatively affected operating
profits for the year. Net profit before taxation for the division reduced from
R24.7 million to R12.4 million, a disappointing drop of 50%.
Goldenmarc suffered a reduction in profitability for the period amounting to
R11.4 million in comparison to 2008.
The management of Goldenmarc have been extremely pro-active in addressing the
current challenges. A number of significant cost saving measures have been
undertaken, including outsourcing of the primary distribution and merchandising
functions, as well as rationalisation of stock levels and staffing overheads.
This, in conjunction with emphasis on increasing volumes and an improving
retail environment, should result in an improved performance in 2010. It is
also pleasing to note that management`s aggressive attention to working capital
levels has resulted in the company generating positive cash flows during this
period.
Foodserv and Ferrengi have maintained profitability levels despite a difficult
trading environment, and with the anticipated improvement in performance at
Goldenmarc, results should be restored in the coming year.
Cash generated from operating activities within the trading division amounted
to R16.0 million (2008: R22.9 million), a pleasing result in light of the
reduced profitability.
Nu-Africa Comm Trading is a new joint venture initiative established with a
view to taking advantage of trading with neighbouring countries. This JV was
only established shortly before year end, and consequently the results thereof
whilst profitable, are not material to the current year`s results.
Services division, including Interpark, Sterikleen, Levingers, Chattels, Vital
Distribution, Vital Fleet, Staffing Logistics and Delawood
The divisional revenue for the year increased by 77.0% to R348.7 million
(2008: R196.7 million). Although the increase was largely as a result of the
new acquisitions, the existing companies all performed positively.
Profit before taxation for the division increased by 42% to R40.6 million
(2008: R28.6 million). New acquisitions contributed R14.5 million.
Interpark and Sterikleen once again turned in robust performances, growing in
revenue and in so demonstrating their ability to withstand varied market
conditions. Notwithstanding this performance, both companies continue to
explore ways to expand into new markets, to improve operating efficiencies and
to be acquisitive.
Levingers experienced a difficult year as volumes and operating profits came
under considerable pressure in the current price sensitive dry-cleaning market.
Management are however focused on closing non-performing stores and
rationalising factory and head office costs, which should restore results in
the coming year.
Looking ahead, the division will benefit from the inclusion of the full year
results for the acquisitions, and Chattels, an event infrastructure management
company, is expected to benefit from the 2010 FIFA World Cup.
Cash generated from operating activities within the services division amounted
to R42.1 million, an increase of 64.9% (2008: R25.5 million).
PROSPECTS
While it is anticipated that the prevailing economic environment will continue
to have an impact on the Group`s trading division, rationalisation measures
implemented during the year under review are expected to have a positive effect
in the year ahead, and consequently an improved performance is expected from
this division. An improved economic environment would further enhance this
effect.
The services division of the Group has proved to be more robust, and
consequently the impact of the prevailing economic environment, while
meaningful, is less dramatic when compared with the trading division. We expect
continued growth in this division in the year ahead.
Of additional prospective interest is the potential trading opportunities that
have opened up due to the dollarisation of the Zimbabwean economy.
Excellerate`s newly formed joint venture, Nu-Africa Comm Trading, is well-
positioned to explore these opportunities.
The Group will continue to drive a culture of cash generation from existing
businesses, and will seek value enhancing opportunities to exploit synergies
and growth. To this end, it is expected that business vendors having
experienced the impact of the current environment will be more realistic with
value expectations, and that consequently acquisition activity may be more
likely going forward.
Excellerate is well placed to deliver value for shareholders in the year ahead
in terms of earnings growth and cash generation.
DIVIDEND
The Board is pleased to declare a final dividend of 3 cents per share.
Last day for trading and to qualify for and participate
in the final dividend (cum dividend) Friday, 23 October 2009
Trading ex dividend commences Monday, 26 October 2009
Record date Friday, 30 October 2009
Dividend payment date Monday, 2 November 2009
Share certificates may not be dematerialised or rematerialised between Friday,
23 October 2009 and Friday, 30 October 2009, both days included.
BASIS OF PREPARATION OF RESULTS
The provisional condensed consolidated financial results for the year ended 30
June 2009 have been prepared in accordance with the recognition and measurement
criteria of IFRS, its interpretations adopted by the International Accounting
Standards Board (IASB), the presentation as well as the disclosure requirements
of IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE
Limited and in the manner required by the South African Companies Act.
The accounting policies applied in the presentation of the provisional
condensed consolidated financial results are consistent with those applied for
the year ended 30 June 2008.
RELATED PARTY TRANSACTIONS
The Group, in the ordinary course of business and similar to last year, entered
into various sale and purchase transactions on an arms length basis at market
rates with related parties.
INDEPENDENT REVIEW
The provisional condensed consolidated balance sheet at 30 June 2009 and the
related provisional condensed consolidated income statement, statement of
changes in equity and cash flow statement for the year then ended have been
reviewed by our auditors, KPMG Inc. Their unmodified review report is available
for inspection at the registered office of Excellerate.
On behalf of the Board
Gordon Hulley (CEO)
Sandton
29 September 2009
Administration
Registered office
1st Floor
Atholl Square
Corner Katherine Street and Wierda Road East
Sandown, 2196
PO Box 785448, Sandton, 2146
Tel: (+27 11) 523 2980, Fax: (+27 11) 523 2990
E-mail: info@excellerate.co.za
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Share transfer secretary
Computershare Investor Services (Pty) Ltd
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, 2198
Tel: (+27 11) 728 0742, Fax: (+27 11) 728 4226
email: ergoodmn@netactive.co.za
Directors
Gordon Hulley (Chief executive officer), Harold Bloch (Executive director),
Peter Kramer (Executive director), Alan Lipchin (Executive director), Athol
Stewart (Executive director), James Wellsted (Executive director), Rudi Stumpf
(Non-executive director), Graham Davel (Non-executive director), Clive Howell
(Non-executive director) (alternate to Graham Davel), Michael Mohohlo
(Non-executive director)
Date: 29/09/2009 16:34:01 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 the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
