| Mon 17 May 2010, 17:02 | | CCI - CIC Holdings Limited - Reviewed group results for the year ended 28 |
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CCI
CCI
CCI - CIC Holdings Limited - Reviewed group results for the year ended 28
February 2010
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 Group" or "the Company")
REVIEWED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010
KEY INFORMATION
- Profit from operations up 49,6% to N$105,1 million.
- Headline earnings up 24,4% to N$58,2 million.
- Headline earnings per share up 24,3% to 25,6 cents.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
28 FEBRUARY 2010
Year Year
ended ended
28/02/2010 28/02/2009 Change
N$`000 N$`000 %
REVIEWED AUDITED
Revenue 2 530 972 2 258 977 12,0
Profit from operations 105 132 70 285 49,6
Depreciation (11 404) (8 263) 38,0
Net finance expense (2 339) (1 565) 49,5
Share of profit of associates 3 789 8 726 (56,6)
Profit before tax 95 178 69 183 37,6
Income tax expense 34 317 20 270 69,3
Profit for the year 60 861 48 913 24,4
Other comprehensive income
Foreign currency translation (3 736) 1 575
differences for foreign operations
Total comprehensive income for the 57 125 50 488
year
Profit for the year attributable to:
Equity holders of the company 54 051 46 835 15,4
Non-controlling interest 6 810 2 078 227,7
60 861 48 913 24,4
Total comprehensive income
attributable to:
Equity holders of the company 50 467 48 419
Non-controlling interest 6 658 2 069
57 125 50 488
Earnings per ordinary share
Weighted average (cents) 23,7 20,6 15,0
Diluted (cents) 22,5 19,9 13,1
Fully diluted (cents) 21,4 18,6 15,1
Headline earnings per ordinary share
Weighted average (cents) 25,6 20,6 24,3
Diluted (cents) 24,3 19,9 22,1
Fully diluted (cents) 23,1 18,6 24,2
Number of ordinary shares (`000)
Weighted average 227 755 226 992
Diluted 239 750 234 961
Fully diluted 252 188 252 188
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
28 FEBRUARY 2010
Year Year
ended ended
28/02/2010 28/02/2009
N$`000 N$`000
REVIEWED AUDITED
ASSETS
Non-current assets 162 368 130 657
Property, plant and equipment 35 635 28 761
Intangible assets 87 312 33 773
Deferred income tax assets 9 446 9 236
Investments in associates 25 409 54 668
Other receivables 4 566 4 219
Current assets 518 439 483 960
Inventories 176 011 201 735
Trade and other receivables 298 648 213 188
Loans to associates - 4 033
Income tax assets 644 1 301
Cash and cash equivalents 43 136 63 703
Total assets 680 807 614 617
EQUITY AND LIABILITIES
Total shareholders` equity 265 055 229 533
Issued capital 129 985 129 859
Reserves 135 070 99 674
Non-controlling interest 10 629 3 586
Total equity 275 684 233 119
Non-current liabilities 32 014 30 049
Interest-bearing borrowings 12 533 13 185
Deferred income tax liabilities 4 983 393
Deferred operating lease liabilities 11 411 13 570
Provisions 3 087 2 901
Current liabilities 373 109 351 449
Interest-bearing borrowings 12 527 9 166
Deferred operating lease liabilities 1 850 867
Accounts payable and accrued liabilities 298 775 295 473
Acquisitions purchase consideration payable 28 690 15 869
Income tax liabilities 13 728 9 738
Bank overdraft 17 539 20 336
Total equity and liabilities 680 807 614 617
Net asset value per share (cents) 105,1 91,0
Net tangible asset value per share (cents) 70,5 77,6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
28 FEBRUARY 2010
Year Year
ended ended
28/02/2010 28/02/2009
N$`000 N$`000
REVIEWED AUDITED
Cash generated by operations 112 103 73 949
Changes in working capital (63 281) (42 220)
Net finance and investment expense (3 230) (1 686)
Income tax paid (30 571) (15 269)
Cash inflow from operations 15 021 14 774
Investment to maintain operations: (3 617) (9 700)
- Additions to property, plant and equipment (6 109) (10 727)
- Proceeds on disposal of property, plant and 2 492 1 027
equipment
Investments in associates (6 152) (26 083)
Proceeds on disposal of a portion in - 462
subsidiary
Investments in subsidiaries 6 410 (3 564)
Change in loans to associates and other 4 620 -
Dividends received 1 140 2 736
Cash inflow/(outflow) from investing 2 401 (36 149)
activities
Proceeds on shares issued 126 298
Minorities acquired in existing subsidiaries (5 755) (5 017)
Net movement in borrowings (12 044) (3 394)
Dividends paid (17 547) (7 966)
Cash outflow from financing activities (35 220) (16 079)
Net decrease in cash and cash equivalents (17 798) (37 454)
Forex translation adjustments on cash and 28 -
cash equivalents
Cash and cash equivalents at beginning of the 43 367 80 821
year
Cash and cash equivalents at end of the year 25 597 43 367
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
28 FEBRUARY 2010
Year Year
ended ended
28/02/2010 28/02/2009
N$`000 N$`000
REVIEWED AUDITED
Total comprehensive income 57 125 50 488
- Net profit for the year 60 861 48 913
- Translation of foreign entities (3 736) 1 575
Balance at beginning of period as previously 233 119 190 674
reported
Share option reserve 255 342
Additional shares acquired - transfer from (5 755) (5 015)
minority
Shares sold - transfer to minority - 4 358
Non-controlling interest on acquisition of 7 277 -
subsidiary
Options exercised 126 298
Ordinary dividends (16 463) (8 026)
Balance at end of the year 275 684 233 119
Comprising:
Share capital 228 228
Share premium 129 757 129 631
Share option reserve 4 049 3 866
Accumulated profit 135 757 97 018
Translation of foreign entities (4 736) (1 210)
Non-controlling interest 10 629 3 586
275 684 233 119
CONDENSED CONSOLIDATED SEGMENT REPORT
28 FEBRUARY 2010
OPERATIONAL SEGMENTATION
Agency divisions Sales and Merchandising
2010 2009 2010 2009
REVIEWED AUDITED REVIEWED AUDITED
N$`000 N$`000 N$`000 N$`000
Revenue
External 2 180 249 2 115 432 179 835 -
Intersegmental 136 859 95 924 422 -
2 317 108 2 211 356 180 257 -
Attributable earnings 35 108 36 990 11 845 4 538
Capital expenditure 8 619 8 824 989 -
Segment assets and
liabilities
- Assets 502 952 511 473 124 582 58 701
- Liabilities (315 537) (339 648) (48 755) (14 007)
- Inter-group (72 990) (51 238) (2 524) (2 537)
balances
Staffing solutions Group services
2010 2009 2010 2009
REVIEWED AUDITED REVIEWED AUDITED
N$`000 N$`000 N$`000 N$`000
Revenue
External 170 888 143 545 - -
Intersegmental 16 484 15 165 - -
187 372 158 710 - -
Attributable earnings 4 703 3 221 2 395 2 086
Capital expenditure 2 424 1 758 31 145
Segment assets and
liabilities
- Assets 40 846 33 804 12 427 10 639
- Liabilities (19 361) (17 340) (21 470) (10 503)
- Inter-group (7 793) (6 669) 83 307 60 444
balances
Elimination Total
2010 2009 2010 2009
REVIEWED AUDITED REVIEWED AUDITED
N$`000 N$`000 N$`000 N$`000
Revenue
External 2 530 972 2 258 977
Intersegmental (153 765) (111 089) - -
(153 765) (111 089) 2 530 972 2 258 977
Attributable earnings 54 051 46 835
Capital expenditure 12 063 10 727
Segment assets and
liabilities
- Assets 680 807 614 617
- Liabilities (405 123) (381 498)
- Inter-group - -
balances
COMMENTARY
The Group`s income streams emanate from three main business segments, being the
agency division, sales and merchandising and staffing solutions. Revenue growth
has been satisfactory in most markets, given the challenges in African economies
and the global financial crisis.
Whilst businesses outside of South Africa fared better for the period, the
general trend can be described as positive.
The agency divisions remain the largest segment of the Group`s business both
from a revenue and profit perspective, followed by the sales and merchandising
business, and then staffing solutions.
RESULTS
Total revenue for the period increased by 12% to N$2,5 billion. Profit from
operations grew a satisfactory 49,6% to N$105,1 million and operating profit
margins improved to 4,2% from 3,1%.
This growth was due to a combination of improving category mix in the agency
divisions, good margin improvements in staffing solutions, and acquisitions
within the sales and merchandising space.
Foreign exchange exposure in the Mozambique operations resulted in a loss of
N$9,5 million. This was due to a weakening of the Mozambique Metical against the
Rand during the period.
Profit before tax improved 37,6% to N$95,2 million. Income tax charges were
adversely affected by secondary, withholding and additional taxes that relate
mainly to dividend payments by Group companies.
SEGMENTAL REVIEW
AGENCY DIVISIONS
All businesses performed to expectation at operating profit level. The
performance of this division was marred by the significance of the foreign
exchange loss in the Mozambican business.
Namibia enjoyed good top line trading with good additional volumes being
generated cross border with Angola for most of the year. Botswana also enjoyed
top line growth in many categories with some Zimbabwean cross border upside in
the first six months of the year.
Mozambique experienced a difficult year of trading as the local currency played
havoc with pricing to the customers as the currency devalued. Consumers resisted
price increases and consumption in almost all categories were negatively
affected. A number of new categories were added during the year which assisted
in bolstering the basket of sales. Whilst this year has had its challenges there
remains a good air of optimism with an expected improvement in the local
economy.
STAFFING SOLUTIONS
The staffing solutions business performed well in a tough trading environment.
The hospitality division increased its customer base and performed to
expectation.
The Botswana division performed particularly well as it expanded its service
offering during the year.
SALES AND MERCHANDISING
The Group is now well represented throughout South Africa. CIC increased its
shareholding in Vital Merchandising Services Holdings (Pty) Limited ("VMS") by
24,5% during the year. VMS acquired a major shareholding in Peak Instore (Pty)
Limited, a brand activations company, during the last quarter.
Profitability was bolstered somewhat by the increase in shareholding in the
sales and merchandising business. The business as such performed fairly well in
South Africa against the backdrop of a slow economy, high wage increases and
trade destocking.
PROSPECT
The fall of published inflation numbers may well be a positive sign for the
regional economy. However, higher wage increases and the threat of lingering and
persistent high fuel prices will aggravate cost increases and put pressure on
margins.
In many instances there are price decreases in the pipeline that merely
aggravate margin pressure, whilst consumers remain hawkish regarding increased
spending.
Focus will have to be on cost innovation to impact positively on margins, but
not affecting service delivery.
It is hoped that there is stability in Mozambique towards the World Cup. In
addition the government published salary and wage increases at a new minimum
level in May. It is hoped that this will restore some upside to consumer
spending, particularly around the World Cup.
Staffing solutions should enjoy some strong upside with the World Cup activity
in the hospitality sector in the first six months of the financial year.
The Group has a major shareholding in Horizon Distributors Limited, an agency
business based in Zambia. This is a start up business and it is an exciting
venture for the Group. A number of Principals have already signed up, with
exciting prospects of additions during the year. Whilst the business will
achieve profitability for the full year, it is anticipated that meaningful
results will be achieved in the second year of operation.
The Group continues to focus on acquisitions and expansions within the Southern
African region. This remains a cornerstone requirement for growth to expand
CIC`s footprint in Africa.
NOTES
1. Basis of preparation and accounting policies
The condensed consolidated financial statements have been prepared in terms of
International Financial Reporting Standards ("IFRS"), IAS 34 - Interim Financial
Reporting and in compliance with the Listings Requirements of the JSE Limited.
The accounting policies used in the preparation of the condensed consolidated
financial statements are consistent with those used in the Annual Financial
Statements for the period ended 28 February 2009, except for the changes
required by IAS 1 (revised): Presentation of Financial Statements and IFRS 8:
Operating Segments. These changes had no material effect on the results.
2. Headline earnings
REVIEWED AUDITED
12 months 12 months
ended ended
28/02/2010 28/02/2009
N$`000 N$`000
Reconciliation of headline earnings
Profit for the period 60 861 48 913
Non-trading items
- capital profit (152) (66)
- capital loss 918 54
- fair value adjustment (IFRS 3) 4 618 -
- impairment of intangible assets 2 501 -
Plus: tax on the above items (202) 5
Headline earnings 68 544 48 906
Headline earnings attributable to:
Equity holders of the Company 58 240 46 821
Non-controlling interest 10 304 2 085
68 544 48 906
3. Fair value adjustment (IFRS 3)
The Group acquired a further effective 24,5% interest in VMS. As result of the
transaction VMS became a subsidiary of CIC and is no longer treated as an
Associate. In terms of IFRS 3 (revised) a deemed disposal of the equity
accounted investment took place at fair value when the additional shares were
acquired. This resulted in an accounting loss of R5,4 million which represents
the difference between the carrying value and the fair value of the equity
accounted investment on the effective date. This loss is excluded from the
calculation of Headline Earnings.
4. Operating lease commitments
The Group has outstanding operating lease commitments totalling N$85,3 million
(2009 - N$87,1 million).
5. Reviewed results
PricewaterhouseCoopers, the Group`s independent auditors, have reviewed the
condensed consolidated financial statements for the year ended 28 February 2010,
that comprise the condensed consolidated statement of financial position as at
28 February 2010, condensed consolidated statement of comprehensive income,
condensed consolidated statement of changes in equity, and condensed
consolidated statement of cashflows for the year then ended and have expressed
an unqualified review opinion on these reviewed condensed consolidated financial
statements. The review report is available for inspection on request at the
Company`s registered office.
6. Dividend
The directors are pleased to announce that they have declared a final dividend
of 7 cents per share on 12 May 2010 (2009 - 5,5 cents).
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, 25 June 2010
Trading ex dividend commences Monday, 28 June 2010
Record date Friday, 2 July 2010
Payment date Monday, 5 July 2010
Share certificates may not be dematerialised or rematerialised between Monday,
28 June 2010 and Friday, 2 July 2010, both dates inclusive.
For and on behalf of the Board of Directors
TP Rogers FW Britz
Chief Executive Officer Chief Financial Officer
12 May 2010
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: 011 807 0109 Fax: 011 807 1316
Transfer secretaries:Computershare Investor Services (Pty) Limited70 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 BritzH-B
Gerdes*#JA Holtzhausen*P Malan*FW Swart*
* Non-executive # Namibian Citizen
Company secretary:
JFB Smit
Date: 17/05/2010 17:02:02 Produced by the JSE SENS Department.
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