| Thu 15 Feb 2001, 0:00 | | Seardel - Interim Report |
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SEARDEL INVESTMENT CORPORATION LIMITED
Interim report to shareholders for the six months ended December 2000
Unaudited Consolidated Income Statement for the six months ended 31 December
2000
Six months ended 31 December Year ended
2000 1999 % Change 30 June 2000
Rand thousands (unaudited) (unaudited) on 1999 (audited)
Revenue R1 064 589 R1 062 426 +0.2% R1 895 278
Profit from operations 47 322 55 453 -14.7% 90 521
Depreciation 16 847 13 240 26 941
Exceptional items - - 1 900
Net finance charges 24 829 27 079 52 271
Add attributable income of
associated companies 10 129 6 995 32 654
Income before taxation 15 775 22 129 -28.7% 45 863
Taxation 836 3 319 2 934
Income after taxation 14 939 18 810 -20.6% 42 929
Income (loss) attributable
to outside shareholders of
associated companies 1 395 434 (221)
Earnings attributable to
shareholders R13 544 R18 376 -26.3% R43 150
Capital and reserves R972 342 R492 092 +97.6% R520 273
Statistics per share
Number of shares in
issue (000) 107 134 107 134 107 134
Net asset value cents
per share 888 438 +102.8% 467
Earnings - historic cents
per share 12.6 17.2 -26.3% 40.3
- headline cents per share 12.6 18.2 -30.8% 28.9
Distribution (annual - refer announcement)
cents per share - - 6.0
Earnings yield 14.1% 22.7% 20.8%
Distribution yield 1.8% 6.1% 4.3%
Distribution cover - headline - - 4.8
COMMENT ON RESULTS
Shareholders' attention is drawn to the Chairman's remarks contained in the
annual report to shareholders dated 27 September 2000, relating to prospects
for the 2001 financial year "...weak demand and a slow start to the new
financial year, with revenue for the first two months being 12,8% below last
year". There has been hardly any improvement in this trend to end December 2000
The acquisition of the remaining shares in Prima Toy & Leisure Group Limited
and Frame Group Limited that the group did not already own, resulted in these
two entities becoming 100% owned subsidiaries. In terms of the group's
accounting policies, their results have therefore been consolidated from their
dates of acquisition, i.e. 1 November 2000 and 11 December 2000 respectively.
Resulting therefrom, net asset value per share increased to 888 cents from 438
cents last year and 467 cents in June 2000. Total assets now amount to R2,4
billion.
Revenue at R1064,6 million is marginally above the previous year's level of
R1062,4 million (which did not include Prima or Frame). The slow down in
economic activity during the period under review reduced earnings by 26,3% to
R13,6 million. Pre-tax income decreased by 28,7% to R15,8 million and income
after tax decreased by 20,6% to R14,9 million. After making adjustments for
minority interests, attributable earnings to shareholders decreased by 26,3% to
R13,6 million. Headline earnings per share, however, decreased by 30,8% to 12,6
cents from 18,2 cents last year.
The group has rationalised certain manufacturing activities in KwaZulu-Natal
and has downsized others where appropriate.
The number of shares in issue remains unchanged at 107,1 million.
Export activity has increased marginally to 12,3% of total apparel sales
compared to 12,1% last year. Consumer disposable income has been under
pressure, and has felt the impact of legalised gambling together with increased
usage of cellular telephone technology. It is anticipated that interest rates
will, in the short-term, reduce slightly, which may translate into increased
retail trade in semi-durable goods, and it is to be hoped that consumer
spending patterns will be re-adjusted accordingly.
Commentary
Most clothing retailers did not enjoy buoyant trading conditions in Summer
2000, with the exception of the Christmas trading period, which in some cases
exceeded expectations.
Over a six-month period ending with a Clothing/Textile Industry Summit in
September 2000, the industry engaged in extensive strategic discussions with
all of the major stakeholders. The interactions with these stakeholders showed
that on most macro issues our clothing interests coincided with the interests
of the Textile Industry. Hence, the Clothing Federation is engaging with the
Textile Federation with a view to combining these two federations, in so doing
increasing the strength of our voice with government.
The Sector Summit process showed that the single biggest threat facing our
industry is the cost of labour in our product. This is being addressed on an
ongoing basis. Preferential duty and quota access to the US and EU markets
assists us in this cause.
Co-operation and dialogue with the Departments of Trade & Industry and Finance
(Customs) is constructive and ongoing. We anticipate that the five-year Duty
Credit Certificate Scheme will be gazetted shortly and that Country of Origin
legislation will be implemented this year. We welcome the investigations that
the Department of Customs is currently directing at persons retailing goods on
which the relevant duties (due to under-invoicing or misdeclaration) and VAT
may not have been paid.
Outlook to June 2001
During the next six months trading period the full results of the Frame group
will be consolidated. This will improve group profitability.
DISTRIBUTION ANNOUNCEMENT
In keeping with past practice, a single distribution will be considered at the
end of the financial year.
BOARD APPOINTMENTS
Mrs Tina Eboka was appointed as a non-executive director to the Seardel board
in October 2000.
Messrs Walter Simeoni and Rob Whiteford, who have been associated with the
Frame Group for many years as chief executive officer and financial director
respectively, were appointed to the Seardel board as executive directors on 15
February 2001.
Mr Ken Geeling has retired with effect from 15 February 2001. We sincerely
thank him for his valued contribution to the group over the past seven years
and wish him well.
By order of the board of Seardel Investment Corporation Ltd.
Reg. No. 1968/011249/06.
DR A SEARLL D.B.A. A D JACOBSON C.A.(S.A.)
(Chairman) (Financial Director)
16 February 2001
Secretary and Registered Address
A D Jacobson, 2nd Floor, Seardel House, Alphen Park, Constantia Main Road,
Constantia 7806, Cape Town
Board of Directors
A Searll (Chairman), G C de Bruin (Joint Managing), B G Richards (Joint
Managing), C Beekman, K A G Blumberg, M D Davidson, S H Diamond,
T Eboka, A D Jacobson, A Keller, R L Richter, M Schaffer, M R Sternberg,
W Simeoni, E Stummer, R J Whiteford, K Winer.
FINANCIAL HIGHLIGHTS
Rand thousands %Change
Revenue R1064,6 million +0,2
Profit from operations after depreciation R30,5 million -27,8
Income before taxation R15,8 million -28,7
Attributable earnings R13,6 million -26,3
Earnings per share 12,6 cents -26,3
Headline earnings per share 12,6 cents -30,8
Capital and reserves R972,3 million +97,6
The unaudited consolidated financial statements of the group for the six months
ended 31 December 2000 with comparative figures for the
corresponding period last year, together with the audited financial statements
for the financial year ended 30 June 2000 are set out below.
INCOME STATEMENT
SIX MONTHS ENDED 31 DECEMBER Year Ended
30 June
2000 1999 % Change 2000
Rand thousands (unaudited) (unaudited) (audited)
Revenue R1 064 589 R1 062 426 +0.2% R1 895 278
Profit from operations 47 322 55 453 -14.7% 90 521
Depreciation 16 847 13 240 26 941
Exceptional items - - 1 900
Net finance charges 24 829 27 079 52 271
Add attributable income
of associated companies 10 129 6 995 32 654
Income before taxation 15 775 22 129 -28.7% 45 863
Taxation 836 3 319 2 934
Income after taxation 14 939 18 810 -20.6% 42 929
Income (loss) attributable to
outside shareholders of
subsidiaries 1 395 434 (221)
Earnings attributable to
shareholders R13 544 R18 376 -26.3% R43 150
STATISTICS PER SHARE
2000 1999
Number of shares in issue
(000) 107 134 107 134 107 134
Earnings- historic 12.6 17.2 -26,3% 40.3
- headline 12.6 18.2 -30,8% 28.9
Distribution annual -
(refer announcement) cents
per share - - 6.0
Earnings yield 14.1% 22.7% 20.8%
Distribution yield 1.8% 6.1% 4.3%
Distribution cover - headline - - 4.8
BALANCE SHEET
SIX MONTHS ENDED 31 DECEMBER Year Ended
30 June
2000 1999 2000
Rand thousands (unaudited) (unaudited) (audited)
ASSETS
Non-current assets 1 038 599 344 269 385 519
Fixed assets 970 552 205 893 219 179
Interest in associated and
subsidiary companies - 127 817 152 531
Long-term receivables 44 675 4 875 5 720
Deferred taxation 23 372 5 684 8 089
Current assets 1 648 631 724 843 723 853
Inventory 699 958 365 107 402 417
Accounts receivable 718 256 301 387 269 762
Cash and cash equivalents (note 4) 230 417 58 349 51 674
TOTAL ASSETS R2 687 230 R1 069 112 R1 109 372
EQUITY AND LIABILITIES
Capital and reserves 972 342 492 092 520 273
Share capital 11 100 17 528 11 100
Reserves 940 727 452 104 489 448
Shareholders' interest 951 827 469 632 500 548
Outside shareholders' interest 20 515 22 460 19 725
Non-current liabilities 772 734 264 340 183 969
Interest-bearing liabilities (note 4) 628 527 255 891 175 722
Deferred liabilities 144 207 8 449 8 247
Current liabilities 942 154 312 680 405 130
Interest-bearing loans (note 4) 286 864 59 808 100 445
Accounts payable 534 036 249 397 297 426
Bank overdrafts 120 948 3 297 652
Distribution to shareholders 306 178 6 607
TOTAL EQUITY AND LIABILITIES R2 687 230 R1 069 112 R1 109 372
Net asset value per share - cents
(excluding intangible assets) 888 438 467
RATIOS
Profitability
Profit from operations as percentage
of revenue 2.9% 4.0% 3.4%
Income before taxation as percentage
of revenue 1.5% 2.1% 3.4%
Income after taxation as percentage
of revenue 1.4% 1.8% 2.3%
Return on total assets 2.2% 8.8% 9.0%
Return on shareholders' interest 3.1% 5.9% 8.6%
Leverage
Ratio of debt to capital and reserves 138% 104% 102%
Ratio of borrowings to capital and
reserves 83% 53% 43%
Liquidity
Current ratio 1.7 2.3 1.8
Net finance charges cover 1.2 1.6 1.3
ABRIDGED CASH FLOW
Internal cash flow ( 33 838) ( 26 896) 54 236
Interest and taxation paid ( 44 289) ( 29 430) ( 57 787)
Transactions with shareholders ( 6 301) ( 2 501) ( 2 500)
Cash utilised from operating
activities ( 84 428) ( 58 827) ( 6 051)
Investment and financing
activities ( 581 269) ( 9 083) ( 26 357)
Increase in net borrowings (R 665 697) (R 67 910) (R 32 408)
SEGMENTED ANALYSIS
Office automation &
Segment Apparel Textiles* consumer electronics Toys Property
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Revenue % 72 82 13 5 12 13 3 - - -
Operating
income % 29 56 26 21 23 10 6 - 16 13
Total
assets % 27 56 59 19 6 14 3 - 5 11
Includes associated companies
NOTES
1. Accounting policies
The unaudited consolidated financial statements of the group have been prepared
on the historical cost basis, except for land and buildings which are
periodically revalued, using the accounting policies detailed in the annual
report for the year ended 30 June 2000.
2. Capital expenditure and commitments
Net capital expenditure during the period under review amounted to R23 million
(1999: R12m). Commitments in respect of contracted capital expenditure as at 31
December 2000 amounted to approximately R35,9 million (1999: R1m). These
commitments will be financed from internal cash resources.
3. Contingent liabilities
There are contingent liabilities in respect of guarantees furnished by the
company and/or its subsidiaries for mortgage bonds, surety bonds, housing
loans, bank facilities, leases and normal business commitments of subsidiary
and associated companies.
4. Current assets
ABSA Bank advanced a net amount of R532 million to the group, which was
utilised for the acquisition of the remaining shares in Frame Group Limited. In
terms of the facility structure R200 million was repaid to ABSA on 2 February
2001.
Signed for and on behalf of the board in Cape Town
DR A SEARLL D.B.A. A D JACOBSON C.A.(S.A.)
Chairman Financial Director
16 February 2001
