| Thu 5 Nov 2009, 8:00 | | CCI - CIC Holdings Limited - Group Interim Results For The Six Months Ended 31 |
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CCI
CCI
CCI - CIC Holdings Limited - Group Interim Results For The Six Months Ended 31
August 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 "the company" or "Group")
GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
KEY INFORMATION
Profit from operations up 55,5% to N$ 42,2 million.
Headline earnings up 33,4% to N$ 27,7 million.
Headline earnings per share up 29,4% to 11,0 cents.
COMMENTARY
The majority of the company`s income streams emanate from countries outside of
South Africa. Top line sales growth has been satisfactory in most markets,
given the challenges post a collapsed global economic environment.
All categories performed reasonably, with fast moving consumer goods, tobacco
products and alcoholic beverages showing various degrees of a slowdown during
the period in various countries in which the agency businesses operate.
The staffing solutions business performed to expectation aligned with the
downturn of economic activity in the private sector.
RESULTS
Total revenue for the period increased by 17,5% to N$1,2 billion. Profit from
operations grew a satisfactory 55,5% to N$42,2 million. Operating profit
margins at this level improved to 3,5% from 2,6%. This was mainly due to a
combination of the improvement in category mix and capitalisation profits in
the agency business.
Foreign exchange losses of N$ 4,5 million were incurred during the period. The
majority of these losses were as result of the weakening of the Mozambique
Metical against the Rand during the period.
Profit before tax improved 41,2% to N$ 42,2 million. Income tax charges were
adversely affected by secondary, withholding and additional taxes amounting to
N$1,4 million that relate to dividend payments by group companies. As this
will not be repeated in the second six months, the average tax rate will
decrease towards normal tax levels for the full year.
Attributable profit to Group shareholders increased 26,7% to N$ 24,6 million.
The balance sheet reflects increased working capital requirements against the
previous six month period. Inventory, debtors and creditors all increased due
to higher revenue and price increases this period.
Cash and cash equivalents decreased from N$ 43,4 million to N$ 14,9 million.
Net asset value per share has increased to 95,1 cents per share.
REGIONAL REVIEW
NAMIBIA/BOTSWANA
The businesses performed to expectation against the previous year. Whilst top
line growth in Namibia was satisfactory, the effect of the economic slowdown
did affect Botswana`s top line to a fair extent.
Improvements in fuel prices although positive, were offset by rising costs in
the rest of the businesses. Both large countries with small populations still
require the businesses to provide proper service to the customers at service
delivery levels that they have become accustomed to.
The businesses do have balanced portfolios, within fast moving consumer goods,
alcoholic beverages and tobacco that have assisted in improving profitability
for the six months.
The Botswana government however imposed a 30% additional tax on all alcoholic
beverages. The result has been a significant volume decline in the alcoholic
beverage market.
Cost focus remains a key issue as it is expected that cost inflation in
Southern Africa is likely to persist despite declining price increases.
LSC Staffing Solution`s venture in Botswana is delivering encouraging results,
with focus around developing a unique training model that should pay dividends
in the next year.
SOUTH AFRICA
The staffing solutions business was adversely affected by a significant
slowdown in the hospitality market. The focus in hospitality has been the
positioning of HSC (Hospitality Supply Chain) at the top end of the market,
which seems to have been the worst affected. Major sporting events assisted
the revenue stream, but this was always closely followed by prolonged trading
slumps. The blue collar division continued to operate at expected trading
levels as construction staffing merely replaced a slowdown in other blue
collar sectors.
Key existing customers are being retained and it is hoped that some new
innovative offerings will assist the seasonal business period with additional
business. A number of new contract presentations have resulted in the business
being shortlisted for new contracts in the coming months.
VMS (Vital Merchandising Services) performed to expectation, however CIC`s
shareholding is at a level that does not maximise the Group`s shareholder
value at this stage. CIC acquired an additional 24,5% of VMS (Inland) during
the period under review, which will drive returns going forward. As result of
the additional shares acquired, VMS (Inland) is now treated as a subsidiary of
CIC and is therefore consolidated in the Group`s results.
SWAZILAND / MOZAMBIQUE
Top line growth has been satisfactory for the period. The increases in
volumes of fast moving consumer goods, and ready to drink alcoholic beverages
were extremely encouraging, for the first quarter, followed by a slump in
sales relative to a very weak currency in the second quarter, making local
prices face both trade and consumer resistance, in the short term.
Unfortunately a devaluation of the Metical by more than 30% in the trading
period lead to a foreign exchange exposure that had a significant effect on
profitability for the six months.
Despite this occurrence, management remain optimistic that post the
presidential election in Mozambique there will be a normalisation of the
trading pattern as well as a strengthening of the Metical, which bodes well
for trading.
PROSPECTS
One cannot be more than sensitive to an extremely unpredictable road ahead.
The possibility of a significant drop in inflation coupled with consumer
demand that may well be perpetuating negative demand makes it difficult to
predict the balance of the year, especially in South Africa.
CIC`s agency businesses will be working closely with its Principals, mostly
brand leaders in their categories, to drive innovative ways to push additional
top line growth. The markets outside of South Africa, are likely to show
growth in the short term which bodes well for the company. This is critical in
order to have strong sales for the holiday period this year.
In addition the company continues to focus on acquisitions within these
regions. A number of possibilities are being explored at this time, and
shareholders will be advised in due course, as they materialise.
For and on behalf of the board
T P Rogers F W Britz
Chief Executive Officer Chief Financial Officer
5 November 2009
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
ended ended ended Change
31/08/2009 31/08/2008 28/02/2009 %
UNAUDITED UNAUDITED AUDITED
N$,000 N$,000 N$,000
Revenue 1,210,115 1,029,555 2,258,977 17.5
Profit from operations 42 218 27 156 62 022 55.5
Net finance (expense) (1,433) (833) (1,565) 72.0
Share of profit of
equity accounted investees 1,403 3,559 8,726 (60.6)
Profit before tax 42,188 29,882 69,183 41.2
Income tax 14,905 8,984 20,270 65.9
Profit for the period 27,283 20,898 48,913 30.6
Other comprehensive income
Foreign currency
translation differences
for foreign operations (2,911) 190 1,575
Total comprehensive
income for the year 24,372 21,088 50,488
Profit for the period
attributable to:
Equity holders of the
company 24,581 19,397 46,835
Non-controlling interest 2,702 1,501 2,078
27,283 20,898 48,913
Total comprehensive income
attributable to:
Equity holders of the
company 21,670 19,587 48,410
Non-controlling interest 2,702 1,501 2,078
24,372 21,088 50,488
Reconciliation of
headline earnings:
Profit for the period 27,283 20,898 48,913
Non - trading items
- capital profit (102) (130) (66)
- capital loss 737 - 54
- taxation on the above
items (171) 32 5
Headline earnings 27,747 20,800 48,906 33.4
Headline earnings
attributable to:
Equity holders of the
company 25,045 19,297 46,821 29.8
Non-controlling interest 2,702 1,503 2,085 79.8
27,747 20,800 48,906 33.4
Earnings per ordinary
share (cents):
Weighted average 10.8 8.5 20.6 27.1
Diluted 10.3 8.2 19.9 25.6
Fully diluted 9.7 7.7 18.6 26.0
Headline earnings
per ordinary share (cents):
Weighted average 11.0 8.5 20.6 29.4
Diluted 10.5 8.1 19.9 29.6
Fully diluted 9.9 7.7 18.6 28.6
Number of ordinary
shares in issue (`000)
Weighted average 227,672 226,900 226,992
Diluted 239,444 237,015 234,962
Fully diluted 252,188 252,188 252,188
CONDENSED STATEMENT OF FINANCIAL POSITION
6 months 6 months 12 months
ended ended ended
31/08/2009 31/08/2008 28/02/2009
UNAUDITED UNAUDITED AUDITED
N$`000 N$`000 N$`000
ASSETS
Non-current assets 133,858 116,467 130,657
Property, plant and equipment 28,306 24,731 28,761
Intangible assets 66,365 33,612 33,773
Deferred tax 10,767 9,558 9,236
Investments in equity
accounted investees 24,106 44,018 54,668
Other receivables 4,314 4,548 4,219
Current assets 494,959 432,916 483,960
Inventories 153,215 119,411 201,735
Trade and other receivables 314,688 272,230 213,188
Loans to equity
accounted investees 1,582 4,268 4,033
Taxation 1,593 1,137 1,301
Cash and cash equivalents 23,881 35,870 63,703
Total assets 628,817 549,383 614,617
EQUITY AND LIABILITIES
Ordinary shareholders` equity 239,824 200,618 229,533
Issued capital 129,964 129,606 129,859
Reserves 109,860 71,012 99,674
Non-controlling interest 6,098 4,019 3,586
Total equity 245,922 204,637 233,119
Non-current liabilities 26,116 30,862 30,049
Interest-bearing borrowings 10,313 16,522 13,185
Deferred tax 178 810 393
Deferred operating lease liabilities 12,502 13,530 13,570
Non-current provision 3,123 - 2,901
Current liabilities 356,779 313,884 351,449
Current portion of
interest-bearing borrowings 9,281 1,353 9,166
Current portion of deferred
operating lease liabilities 1,434 787 867
Accounts payable and accrued
liabilities 316,074 297,083 295,473
Associates purchase consideration
payable 7,580 9,511 15,869
Taxation 13,380 5,150 9,738
Bank overdraft 9,030 - 20,336
Total equity and liabilities 628,817 549,383 614,617
Net asset value per share (cents) 95.1 79.6 91.0
CONDENSED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
ended ended ended
31/08/2009 31/08/2008 28/02/2009
UNAUDITED UNAUDITED AUDITED
N$`000 N$`000 N$`000
Cash generated by operations prior
to working capital changes 47,849 31,096 73,949
Change in working capital (34,587) (19,023) (42,220)
Cash generated by operations 13 262 12 073 31 729
Net finance and investment
(expense)/income (1,893) 249 (1,686)
Dividends received 1,140 2,736 2,736
Dividends paid (17,450) (8,211) (7,966)
Taxation paid (11,876) (8,617) (15,269)
Cash flow from operating
activities (16,817) (1,770) 9,544
Investment to maintain operations: (3,640) (2,663) (9,700)
- Additions to property, plant
and equipment (4,458) (3,237) (10,727)
- Proceeds on disposal of
property, plant and equipment 818 574 1,027
Investments in equity accounted
investees (6,152) (28,072) (26,083)
Investment in subsidiary 5,982 (2,869) (3,564)
Proceeds on disposal of portion
in subsidiary - 444 462
Loans repaid 3,089 - -
Cash flow from investing activities (721) (33,160) (38,885)
Proceeds on shares issued 105 45 298
Minorities acquired in subsidiaries (5,755) (3,500) (5,017)
Net movement in borrowings (5,328) (6,566) (3,394)
Cash flow from financing activities (10,978) (10,021) (8,113)
Net movement in cash and cash
equivalents (28,516) (44,951) (37,454)
Cash and cash equivalents at
beginning of the period 43,367 80,821 80,821
Cash and cash equivalents at
end of period 14,851 35,870 43,367
CONDENSED STATEMENTS OF CHANGES IN EQUITY
6 months 6 months 12 months
ended ended ended
31/08/2009 31/08/2008 28/02/2009
UNAUDITED UNAUDITED AUDITED
N$`000 N$`000 N$`000
Total comprehensive income 24,372 21,088 50,488
- Profit for the period 27,283 20,898 48,913
- Other comprehensive income (2,911) 190 1,575
Balance at beginning of period
as previously reported 233,119 190,674 190,674
Share option reserve 170 - 342
Shareholding increased in
subsidiary (5,733) (3,500) (5,015)
Subsidiary acquired 7,979 - -
Shareholding decreased in
subsidiary - 4,356 4,358
Equity share options issued 105 45 298
Ordinary dividends (14,090) (8,026) (8,026)
Balance at end of the period 245,922 204,637 233,119
Comprising:
Share capital 228 227 228
Share premium 129,736 129,379 129,631
Share option reserve 3,882 3,505 3,866
Accumulated profit 109,875 70,097 97,018
Translation of foreign entities (3,897) (2,590) (1,210)
Non-controlling interest 6,098 4,019 3,586
245,922 204,637 233,119
CONDENSED SEGMENT REPORT
For the six months ended 31 August 2009
GEOGRAPHIC SEGMENTATION
Namibia and Botswana
2009 2008
N$`000 N$`000
Revenue 974,215 839,670
Attributable earnings 17,923 14,762
Capital expenditure 2,847 1,707
Segment assets and
liabilities
- Assets 388,050 361,502
- Liabilities (277,756) (267,354)
- Inter-group balances (44,066) (36,937)
South Africa Swaziland and Mozambique
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue 137,962 134,389 97,938 55,496
Attributable earnings 4,104 4,781 2,730 3,590
Capital expenditure 1,403 1,121 177 265
Segment assets and
liabilities
- Assets 189,047 134,096 39,814 15,895
- Liabilities (63,232) (68,570) (23,889) (3,738)
- Inter-group balances (27,200) (33,574) 1,352 (418)
Group services Total
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue - - 1,210,115 1,029,555
Attributable earnings (176) (3,736) 24,581 19,397
Capital expenditure 31 144 4,458 3,237
Segment assets and
liabilities
- Assets 11,906 37,890 628,817 549,383
- Liabilities (18,018) (5,084) (382,895) (344,746)
- Inter-group balances 69,914 70,929 - -
OPERATIONAL SEGMENTATION
Agency divisions Staffing solutions
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue 1,137,048 958,476 73,067 71,079
Attributable earnings 23,364 21,478 1,393 1,655
Capital expenditure 3,101 2,173 1,326 920
Segment assets and
liabilities
- Assets 601,465 485,348 35,974 32,838
- Liabilities (430,808) (392,210) (24,511) (25,075)
Group services Total
2009 2008 2009 2008
N$`000 N$`000 N$`000 N$`000
Revenue - - 1,210,115 1,029,555
Attributable earnings (176) (3,736) 24,581 19,397
Capital expenditure 31 144 4,458 3,237
Segment assets and
liabilities
- Assets (8,622) 31,197 628,817 549,383
- Liabilities 72,424 72,539 (382,895) (344,746)
Basis of preparation and accounting policies
The condensed consolidated interim financial statements for the six months
ended 31 August 2009 have been prepared in accordance with, and containing
the information required by International Accounting Standard 34: Interim
Financial Reporting and with International Financial Reporting Standards
(IFRS)and the Listing Requirements of the JSE Limited. The accounting
policies applied are consistent, in all material respects, with those used in
the Annual Financial Statements for the year ended 28 February 2009.
These interim financial statements have not been audited or reviewed by the
group`s auditors.
Post-balance sheet events
There have been no significant events subsequent to 31 August 2009 and up
to the date of this report that would require adjustment.
Dividend
No dividend has been declared as the Group only declares a final dividend
after its financial year end.
Johannesburg
5 November 2009
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)
Sponsor
PSG Capital (Pty) Limited
Directorate
BH Kent (Chairman)*, TP Rogers (Chief Executive Officer), EHT Angula*#,FW
Britz, H-B Gerdes *#, JA Holtzhausen*,FW Swart*,P Malan*
* - Non-executive, # - Namibian Citizen
Company Secretary
JFB Smit
Tuscany Office Park, Block 5
Coombe Place, Rivonia
Date: 05/11/2009 08:00:01 Produced by the JSE SENS Department.
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