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SKJ
SKJ
SKJ - Sekunjalo Investments Limited - Unaudited interim results for the period
ended 28 February 2011
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: SKJ and ISIN: ZAE000017893
("Sekunjalo" or "the Group" or "the Company")
Unaudited interim results for the period ended 28 February 2011
Abridged Group statement of comprehensive income
Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2011 2010 2010
R`000 R`000 R`000
Revenue 134 363 149 889 403 168
Profit from operations 13 834 12 725 33 148
Investment revenue 2 144 4 411 5 567
Loss from equity accounted (3 698) (3 365) (6 596)
investments
Finance cost (3 851) (6 636) (11 033)
Profit before taxation 8 429 7 135 21 086
Taxation (1 762) (2 579) (12 511)
Profit for the period 6 667 4 556 8 575
(Loss)/profit from discontinued
operations (1 165) (898) 215
Total comprehensive income 5 502 3 658 8 790
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent 6 843 3 485 8 176
Non-controlling interest (1 340) 173 614
5 502 3 658 8 790
Headline earnings 6 642 1 120 12 898
Basic and diluted earnings per
ordinary share (cents) 1,40 0,71 1,67
- continuing operations 1,64 0,90 1,97
- discontinued operations (0,24) (0,19) (0,30)
Basic and diluted headline earnings
per ordinary share (cents) 1,36 0,23 2,64
- continuing operations 1,60 0,41 2,94
- discontinued operations (0,24) (0,18) (0,30)
Net asset value per share (cents) 83,62 81,26 82,22
Tangible net asset value
per share (cents) 68,84 64,56 67,18
Weighted (and fully diluted) average
number of ordinary shares
in issue (000) 489 339 489 339 489 339
Abridged Group statement of financial position
Unaudite Unaudite Audited
d d
Group to Group to Group to
28 28 31
February February August
2011 2010 2010
R`000 R`000 R`000
Assets
Non-current assets 571 075 525 314 551 275
Property, plant and equipment 131 902 142 425 138 193
Goodwill 51 549 57 642 51 548
Intangible assets 20 793 24 176 22 060
Investments in associates 135 016 155 766 138 179
Investments in joint ventures 50 50 50
Loan to associate 25 474 - 17 900
Other financial assets 186 639 113 264 157 171
Deferred tax 18 193 31 991 24 956
Operating lease asset 1 459 - 1 218
Current assets 153 679 185 183 173 027
Inventory 30 543 29 132 15 703
Biological assets 33 012 37 065 34 046
Other financial assets 3 448 11 001 2 886
Current tax receivable 758 1 155 864
Trade and other receivables 75 590 74 879 67 451
Cash and cash equivalents 10 328 31 951 52 077
Assets of disposal groups
classified
as held for sale 15 337 - 3 336
Total assets 740 091 710 497 727 638
Equity and liabilities
Equity
Equity attributable to equity
holders of parent
of the parent 409 179 397 724 402 335
Share capital and share premium 403 177 402 977 403 177
Reserves 121 194 121 194 121 194
(Accumulated losses) (115 (126 (122
192) 447) 036)
Non-controlling interest 1 377 (2 594) 867
Total equity 410 556 395 130 403 202
Liabilities
Non-current liabilities 154 021 152 718 153 199
Loan from Group companies 423 529 -
Other financial liabilities 58 612 56 002 53 454
Finance lease obligation 422 - 228
Operating lease liability 1 534 - 1 198
Post-employment medical costs 1 383 - 1 080
Deferred tax 91 647 93 712 97 239
Other non-current liabilities - 2 475 -
Current liabilities 160 177 162 649 165 561
Trade and other payables 66 671 68 728 61 778
Other financial liabilities 25 180 9 298 27 237
Current tax payable 3 108 19 231 8 387
Finance lease obligation 100 - 623
Provisions 19 942 15 968 26 138
Other current liabilities - 245 -
Bank overdraft 45 176 49 179 41 398
Liabilities of disposal groups 15 337 - 5 676
Total equity and liabilities 740 091 710 497 727 638
Abridged Group statement of cash flows
Unaudite Unaudite Audited
d d
Group to Group to Group to
28 28 31
February February August
2011 2010 2010
R`000 R`000 R`000
Cash flows from operating (24 775) (14 770) (4 656)
activities
Cash flows from investing (16 988) 10 730 6 408
activities
Cash flows from financing (6 707) (20 657) (799)
activities
Total cash movement for the period (48 470) (24 697) 953
Cash at the beginning of the 10 678 7 468 7 469
period
Cash and cash equivalents
transferred
to disposal group held for sale 2 944 - 2 256
Cash equivalents at the end
of the period (34 848) (17 229) 10 678
Abridged group statement of changes in equity
For the period ended 28 February 2011
Attribut- Outside Total
able to sharehold equity
ers`
parent interest
R`000 R`000 R`000
Balance at 1 September 2009 394 240 (1 942) 392 298
Profit for the period 8 176 614 8 790
Issue of preference shares in
subsidiary - 1 000 1 000
Dividends paid - (1 869) (1 869)
Treasury shares 200 - 200
Changes in ownership interest -
control not lost (280) 3 065 2 785
Balance at 31 August 2010 402 336 868 403 204
Profit/(loss) for the period 6 843 (1 340) 5 503
Changes in ownership interest -
control not lost - 3 000 3 000
Dividends paid - (1 151) (1 151)
Balance at 28 February 2011 409 179 1 377 410 556
Abridged group segmental report
Financial Informati
on
Services Technolog Fishing
y
Unaudited Unaudited Unaudited
Group to Group to Group to
28 Feb 28 Feb 28 Feb
2011 2011 2011
R`000 R`000 R`000
Revenue 4 623 54 413 69 610
External sales 259 39 009 69 610
Discontinued operations 4 364 15 404 -
Segment result
Operating profit/(loss) 225 4 954 (1 142)
Operating loss - discontinued
operations (367) (42) -
Carrying amount of assets 3 319 76 317 248 783
Carrying amount of liabilities 8 663 62 781 135 915
Group segmental report (continued)
Financial Informati
on
Services Technolog Fishing
y
Unaudited Unaudited Unaudited
Group to Group to Group to
28 Feb 28 Feb 28 Feb
2010 2010 2010
R`000 R`000 R`000
Revenue 8 928 50 553 78 574
External sales 5 316 36 082 78 574
Discontinued operations 3 612 14 471 -
Segment result
Operating (loss)/profit (3 373) 3 755 4 124
Operating (loss)/profit -
discontinued operations (903) 5 -
Carrying amount of assets 24 425 42 306 267 591
Carrying amount of liabilities 56 792 35 587 143 858
Note: Operating profits/(losses) are stated
after elimination of management fees.
Group segmental report (continued)
Bio-
Healthca technolo Corporat Group
re gy e
Unaudite Unaudite Unaudite Unaudite
d d d d
Group to Group to Group to Group to
28 Feb 28 Feb 28 Feb 28 Feb
2011 2011 2011 2011
R`000 R`000 R`000 R`000
Revenue 6 206 - 19 280 154 132
External sales 6 206 - 19 280 134 364
Discontinued operations - - - 19 768
Segment result
Operating profit/(loss) (3 589) (1) 13 387 13 834
Operating loss -
discontinued - - - (409)
operations
Carrying amount of 38 573 168 817 204 281 740 091
assets
Carrying amount of
liabilities 15 549 27 559 79 069 329 535
Loss from associate - (3 698) - (3 698)
Segmental report (continued)
Bio-
Healthca technolo Corporat Group
re gy e
Unaudite Unaudite Unaudite Unaudite
d d d d
Group to Group to Group to Group to
28 Feb 28 Feb 28 Feb 28 Feb
2010 2010 2010 2010
R`000 R`000 R`000 R`000
Revenue 5 749 - 24 168 167 972
External sales 5 749 - 24 168 149 889
Discontinued operations - - - 18 083
Segment result
Operating profit/(loss) (4 196) (13) 12 428 12 725
Operating profit/(loss)
-
discontinued - - - (898)
operations
Carrying amount of 36 348 144 993 194 834 710 497
assets
Carrying amount of
liabilities 56 517 7 351 15 262 315 367
Loss from associate - (3 365) - (3 365)
Note: Operating profits/(losses) are stated
after elimination of management fees.
Note
Unaudited Unaudited Audited
Group to Group to Group to
Determination of 28 28 31 August
February February
headline earnings 2011 2010 2010
R`000 R`000 R`000
Earnings attributable
to ordinary equity
holders of parent
entity IAS 33 6 843 3 485 8 176
Adjusted for:
Impairments of IAS 38/
intangible assets IAS 36 - - 1 380
Gains on disposal of
property, plant
and equipment IAS 36 (201) (2 365) (2 752)
Impairment of
goodwill IFRS3 - - 6 094
Headline earnings 6 642 1 120 12 898
Commentary
Chief executive officer Khalid Abdulla was honoured to take the helm at
Sekunjalo Investments Limited in November 2009, which puts the Group
halfway along its three-year plan to unlock value and build sustainable
growth initiatives.
At this stage we can announce our satisfaction with the performance of
Sekunjalo. As an investment holding company, the group has set its
objective to increase net asset value ("NAV"), which is able to extract
optimum performance from existing interests and also latch onto new
opportunities that present themselves in the prevailing economic
environment.
Key financial highlights
The benchmark to measure our progress is the underlying value, and in this
regard it is pleasing to note further growth in both NAV and tangible net
asset value for the interim period. NAV grew to 83.,2c per share, while
tangible NAV grew to 68,84 per share. Earnings per share from continuing
operations are up by 82%, while headline earnings from continuing
operations quadrupled.
Group operating performance during the interim period proved to be more
than satisfactory with good earnings growth - 50% increase - since last
year.
Our largest investment, Premier Fishing SA (Pty) Ltd, broke even as of
midyear. The investment in the Information Technology Communication group
is performing reasonably well with operating profits increasing by 32%
compared with the prior period.
Generally the Group performs better during the second six months of the
year due to the seasonal nature of the fishing business.
Our non-controlling interests in large multinational companies like British
Telecom Communication Services South Africa (Pty) Ltd ("BTSA") and Saab SA
(Pty) Ltd ("Saab") have proved to be strong value-creating transactions.
Our focused strategy of value creation has also strengthened the statement
of financial position.
Strategic investments
BTSA is the Group`s strategic investment in one of the world`s leading
providers of communication solutions and services. BTSA, which provides
global broadband access and networked IT services to its sub-Saharan
African customers, continues to exceed our expectations. Consequently the
value of our investment in BTSA has increased by 19,7% since the previous
year.
Saab is another strategic investment in which we acquired a 5% equity in
the South African operations in May 2010 (with an option of increasing the
stake to 25%). The deal enhanced Sekunjalo`s status as a partner of choice
for companies investing in South Africa and throughout Africa. The business
has performed according to expectations.
Information technology and communication Sekunjalo Technology Solutions
Group (Pty) Ltd ("Sekunjalo TSG") is a wholly owned subsidiary of Sekunjalo
Investments Limited and focuses on the acquisition and development of niche-
market information and communication technology (ICT) companies.
The division continues to perform well. All subsidiaries are cash positive
and are in a strong financial position. Compared with the previous interim
period, Sekunjalo TSG`s group revenue has increased by 7,6%, mainly
attributable to the revenue contribution from Health System Technologies
(Pty) Ltd and Saratoga Software (Pty) Ltd.
Saratoga Software (Pty) Ltd, a software development company, which builds
custom software solutions for corporate customers, has extended its
previous successes and has been awarded additional medium-term contracts.
Saratoga Software is currently exceeding expectations.
Digital Matter (Pty) Ltd, an innovative technology company, provides mobile
software solutions for a wide range of industry applications for industrial
plant and equipment inspection and asset auditing. The company is below set
targets as the revenue from a major contract has been delayed.
Health System Technologies (Pty) Ltd ("HST") is an information system
provider to the wider healthcare sector and continues to roll out the HIS
and Pharmacy Solution to the provincial government hospitals in the Western
Cape. It also completed the implementation of a new centralised laboratory
information system (LIS) for the National Health Laboratory Services in
KwaZulu-Natal`s 52 laboratories. HST`s management is pleased that the
company has significantly improved from a break-even position of last
year`s interim results to a healthy profit of R3 million. They are
confident the company will continue to yield more positive results.
Fishing
Premier Fishing SA (Pty) Ltd ("Premier") has performed satisfactorily
despite the effect of the stronger rand on revenue income. Interim results
show an operating loss of R1 million compared with operating profit of R4
million in the corresponding interim period last year. However, during the
second six months they consistently perform better due to the seasonal
nature of the business.
The west coast rock lobster division put in a solid performance despite
sales volumes decreasing due to a slow start in sales. The catching season
was delayed as lobster species were unusually small and therefore needed
time to mature. Catching has since recommenced and the company is confident
that the full quota will be caught and sold before the year-end. The
markets in the Far East, where most of the products are sold, are quite
stable and management expects this trend to continue during the second half
of the year. As most sales occur in China, the events in Japan will not
significantly impact our sales in the region.
The south coast rock lobster division had a late start to the season due to
a longer than anticipated off-season maintenance period. Sales have also
been slower as a result of uncontrollable shipping logistics, which have
delayed deliveries to our customers. This has improved subsequently and
management is confident that this division will catch up during the second
half of the year to make up for the shortfall in revenue and profits.
The pricing in the international squid markets has shown improvement. Catch
costs have also decreased due to increased efficiencies in the division.
The hake division also performed better than expected with sales volumes
markedly improved.
The catches in the pelagic division are in line with expectations. The
catching season began in January and improved performance is expected in
the second half of the year.
Premier has also spent extensively on upgrading and maintaining its fishing
fleet and facilities during the interim period, which resulted in
significant outflows. Capital expenditure was approximately R13 million for
fleet maintenance and factory upgrades.
Aquaculture
The abalone division has performed well in the first six months of this
financial year with increased sales volumes. We expect this trend to
continue for the remainder of the year.
Healthcare
Sekunjalo Health Care Ltd ("SHC") is still receiving attention as it
continues to underperform and we are currently considering our options with
our investment and should this business not turn around by year-end, we may
review our position. Being an investment holding company we would like to
extract the maximum value in the option selected.
Biotechnology
Genius Biotherapeutics is South Africa`s largest medical biotechnology
company focused on the manufacture and development of biopharmaceutical
products. The company currently manufactures Repotin (erythropoietin)
active pharmaceutical ingredient in Pretoria, and through its partner
Sekpharma markets and sells the product in South Africa and Namibia.
Genius has applied for a foreign listing with the South African Reserve
Bank and awaits its response to continue with the next stage of the listing
process.
Ribotech (Pty) Ltd, a subsidiary of Genius Biotherapeutics, is in the
process of constructing and developing a facility for the manufacture of
Granulocyte-Colony Stimulating Factor (G-CSF), a product used in the
oncology market. Ribotech is near completion of the development of a state-
of-the-art facility for the manufacture of G-CSF. Engineering work has
largely been completed, with equipment currently in the process of being
installed.
Media
espAfrika (Pty) Ltd, a Group subsidiary, has grown from a one-concert-a-
year company to a company that hosts events around the African continent.
Our footprint in South Africa and Africa has been set with jazz festivals
secured for Port Elizabeth, Botswana and Luanda later this year. Its
performance for the six months is an expected loss but as espAfrika has
most of its events during the second part of the year, management is
confident of it achieving expectations.
Events after reporting date
Subsequent to the financial reporting date the Group concluded the sale of
its investment in Fios (Pty) Ltd.
Prospects
As an investment holding company we are acutely aware of the need to
extract value and drive returns from our existing investments. We are
pleased to be in a position to make new investments and will continue our
strategy as a partner of choice in pursuing joint-venture or equity
arrangements with multinational companies that are keen to secure African
opportunities.
We are confident in our belief to invest meaningfully in the growth of our
operations to improve operational efficiencies and sustainable growth, and
we believe the benefits of these investments, especially in Premier Fishing
(see divisional review), will flow through during the coming years.
The Group will also focus on the marine and fishing business through
acquisitions and leveraging strong margins. Additional external fishing
quota was also purchased during the period and this will contribute further
to our performance.
We are in the process of assessing the modernization of our fishmeal plant
in Saldanha Bay which will strategically position the division for growth
in the medium to long term as well as creating new jobs.
In addition, we are commencing with an Environmental Impact Analysis on our
newly acquired land adjacent to the abalone farm in Gansbaai and this
initiative will not only increase capacity in the division but also
increase our brand presence in the international market as well as creating
additional jobs.
We also believe that our Information Technology Division will expand and
has strong growth potential by providing innovative IT solutions to the
public and private institutions.
Amethst (Pty) Ltd - negotiations to resurrect the Gauteng Department of
Health and Social Development ("GDOHSD") Hospital Information System (HIS)
and Electronic Health Record ("EHR") contract are ongoing. Discussions have
been constructive, and the Group is confident of a favourable outcome.
The Cape Town International Jazz Festival ("CTIJF") has proved to be a
great success and was well received by the public as well as national
government in 2011.
In our last annual report we committed to creating between 100 and 300 jobs
to help uplift the communities in which we operate.
The continuous investment in our employees, the community and our
sustainable business processes has enabled the Group to be actively
involved in improving the economy of the country.
Dividends
No dividends have been declared for the current period. The board continues
to work towards payment of dividends in the foreseeable future.
Appreciation
We wish to acknowledge the loyalty, support and dedication of our staff,
Group executives, management, our board of directors as well as our
stakeholders and business partners.
Dr MI Surve Mr Khalid Abdulla
Executive chairman Chief executive officer
Cape Town
20 April 2011
Directors
*Dr M Iqbal Surve (Executive chairman); *Khalid Abdulla (Chief executive
officer); Rev. Dr Vukile Mehana; Mihe Gaomab, The First; Salim Young;
*Cherie Felicity Hendricks; *Chantelle Ah Sing
*Executive directors*
Company secretary: Cherie Felicity Hendricks
Registered address: Quay 7, East Pier, Victoria and Alfred Waterfront, Cape
Town, 8001,
email: cherieh@sekunjalo.com
Transfer secretaries: Link Market Services South Africa (Pty) Ltd,
11 Diagonal Street, Johannesburg
Auditors: PKF (Cpt) Inc, Cape Town
Sponsor: PSG Capital, Stellenbosch
Date: 20/04/2011 14:37:46 Produced by the JSE SENS Department.
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