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SKJ
SKJ
SKJ - Sekunjalo Investments Limited - Unaudited interim results for the period
ended 29 February 2012
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 29 February 2012
Abridged Group statement of comprehensive income
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Revenue 178 090 134 363 440 390
Cost of sales (110 524) (97 110) (307 886)
Gross profit 67 566 37 253 132 504
Other income 1 745 7 190 12 848
Other operating expenses (53 060) (54 624) (149 062)
Fair value adjustments 10 342 24 015 41 732
Investment revenue 3 175 2 144 20 966
Loss from equity accounted (3 628) (3 698) (8 521)
investments
Finance cost (6 798) (3 851) (13 967)
Profit before taxation 19 342 8 429 36 500
Taxation (12 419) (1 762) (7 295)
Profit for the period 6 923 6 667 29 205
Loss from discontinued operations - (1 165) (1 165)
Total comprehensive income 6 923 5 502 28 040
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 9 159 6 843 26 304
Non-controlling interest (2 236) (1 341) (1 736)
6 923 5 502 28 040
Basic and diluted earnings per 1.87 1.40 5.38
ordinary share (cents)
- continuing operations 1.87 1.64 5.61
- discontinuing operations - (0.24) (0.24)
Weighted(and fully diluted) average 489 339 489 339 489 339
number of ordinary shares in issue
(000s)
Abridged Group statement of financial position
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Assets
Non-current assets 599 223 571 075 591 352
Property, plant and equipment 139 786 131 902 143 443
Goodwill 34 191 51 549 34 191
Intangible assets 19 714 20 793 20 696
Investments in associates 126 564 135 016 130 192
Investments in joint ventures - 50 -
Loan to associate 45 668 25 474 39 111
Other financial assets 207 991 186 639 197 226
Deferred tax 23 280 18 193 24 804
Operating lease asset 2 029 1 459 1 689
Current assets 184 582 153 679 187 409
Inventory 20 173 30 543 17 985
Biological assets 35 027 33 012 34 903
Other financial assets 3 886 3 448 6 060
Current tax receivable 154 758 1 112
Trade and other receivables 93 817 75 590 96 725
Cash and cash equivalents 31 525 10 328 30 624
Assets of disposal groups classified - 15 337 -
as held for sale
Total assets 783 805 740 091 778 761
Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital and share premium 403 177 403 177 403 177
Reserves 121 194 121 194 121 194
Accumulated losses (90 342) (115 192) (99 501)
434 029 409 179 424 870
Non-controlling interest 7 959 1 377 10 195
441 988 410 556 435 065
Liabilities
Non-current liabilities 190 455 154 021 177 862
Other financial liabilities 83 683 58 612 72 839
Operating lease liability 192 1 534 1 120
Deferred tax 104 739 91 647 102 124
Other non-current liabilities 1 841 2 228 1 779
Current liabilities 151 362 160 177 165 834
Trade and other payables 74 237 66 671 94 017
Other financial liabilities 15 636 25 180 11 621
Current tax payable 8 739 3 108 2 761
Provisions 16 782 19 942 19 139
Other current liabilities 71 100 85
Bank overdraft 35 897 45 176 38 211
Liabilities of disposal groups - 15 337 -
Total equity and liabilities 783 805 740 091 778 761
Net asset value per share (cents) 88.70 83.62 86.83
Tangible net asset value per share 77.68 68.84 75.61
(cents)
Abridged Group statement of cash flows
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Cash flows from operating activities 2 578 (24 775) 21 821
Cash flows from investing activities (4 578) (16 988) (22 295)
Cash flows from financing activities 5 215 (6 707) (17 790)
Total cash movement for the period 3 215 (48 470) (18 264)
Cash at the beginning of the period (7 587) 10 678 10 677
Cash and cash equivalents transferred - 2 944 -
to disposal group held for sale
Cash equivalents at the end of the (4 372) (34 848) (7 587)
period
Abridged Group statement of changes in equity
For the period ended 29 February 2012
Attributable Outside Total
to shareholders equity
parent interest
R`000 R`000 R`000
Balance at 01 September 2010 402 335 867 403 202
Profit for the period 26 304 1 736 28 040
Issue of ordinary shares in - 3 599 3 599
subsidiary
Dividends paid - (2 506) (2 506)
Business combinations (3 769) 6 499 2 730
Balance at 31 August 2011 424 870 10 195 435 065
Profit/(loss) for the period 9 159 (2 236) 6 923
Balance at 29 February 2012 434 029 7 959 441 988
Abridged Group segmental report
Information Fishing Healthcare
Technology
Unaudited Unaudited Unaudited
29 February 29 February 29 February
2012 2012 2012
R`000 R`000 R`000
Revenue 73 184 76 017 9 219
External sales 73 184 76 017 9 219
Discontinued operations - - -
Segment results
Operating profit/(loss) 26 436 1 122 (2 592)
Discontinued operations - - -
Carrying amount of assets 79 771 250 348 35 072
Carrying amount of 37 785 116 437 10 903
liabilities
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
29 February 29 February 29 February
2012 2012 2012
R`000 R`000 R`000
Revenue - 19 670 178 091
External sales - 19 670 178 091
Discontinued operations - - -
Segment results
Operating profit/(loss) - 1 627 26 593
Discontinued operations - - -
Included in segment - 10 342 10 342
results:
Fair valuation of
investments
Carrying amount of assets 172 229 246 385 783 805
Carrying amount of 18 682 158 010 341 817
liabilities
Profit/(loss) from (3 628) - (3 628)
associate
Information Fishing Healthcare
Technology
Unaudited Unaudited Unaudited
28February 2011 28February 2011 28February 2011
R`000 R`000 R`000
Revenue 54 413 69 610 6 206
External sales 39 009 69 610 6 206
Discontinued operations 15 404 - -
Segment results
Operating profit/(loss) 4 954 (1 142) (3 589)
Discontinued operations (42) - -
Carrying amount of assets 76 317 248 783 38 573
Carrying amount of 62 781 135 915 15 549
liabilities
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
28February 2011 28February 28February 2011
2011
R`000 R`000 R`000
Revenue - 23 902 154 131
External sales - 19 538 134 363
Discontinued operations - 4 364 19 768
Segment results
Operating profit/(loss) (1) 13 612 13 834
Discontinued operations - (367) (409)
- 24 015 24 015
Included in segment
results:
Fair valuation of
investments
Carrying amount of assets 168 817 207 600 740 091
Carrying amount of 27 559 87 732 329 535
liabilities
Loss from associate (3 698) - (3 698)
Notes
1 Revenue for the Fishing segment is highly
seasonal. Majority of the sales occur in the
second half of the year. During the prior year
annual external sales for the segment amounted
to R221m. The corresponding interim sales were
R69,6m.
2 Included in the taxation expense is a deferred
tax adjustment (expense) of R7.5m to account
for the rate change on the capital gains tax
inclusion rate which has increased from 50% to
66%. The capital gains are in respect of the
cumulative fair value adjustments on the
Group`s investments.
Determination of headline earnings
Unaudited Unaudited Audited
29 28 31 August
February February 2011
2012 2011
R`000 R`000 R`000
Earning attributable to ordinary IAS 33 9 159 6 843 26 304
equity holders of parent entity
Adjusted for:
Loss/-(gains)on disposal of IAS 36 7 (201) (386)
property, plant and equipment
Gains on disposal of subsidiaries IFRS 3 - - 8 225
Impairment of goodwill IFRS 3 - - 38
Headline earnings 9 166 6 642 34 181
Headline earnings per ordinary share 1.87 1.36 2.64
(cents)
- continuing operations 1.87 1.60 2.94
- discontinuing operations - (0.24) (0.30)
Basis of preparation
The condensed consolidated financial information
has been prepared in accordance with IAS 34 -
Interim financial reporting and is based on the
unaudited financial statements of the Group for the
period ended 29 February 2012, which have been
prepared in accordance with International Financial
Reporting Standards ("IFRS"), the AC 500 series of
interpretations, the Listings Requirements of the
JSE Limited, and the Companies Act of South Africa,
2008, as amended.
The unaudited interim financial results for the six
months ended 29 February 2012 were prepared in
accordance with the Group`s accounting policies and
are consistent with those applied in the previous
financial year. The unaudited interim financial
results were prepared by Takudzwa Hove BCom (Hons),
CA(SA).
Commentary
The chief executive officer, Khalid Abdulla is
pleased to announce that the business strategies
implemented are starting to show the expected
improved results for the six-month period under
review.
The Group has set its objectives to increase net
asset value (NAV) by improving operational
performance of its underlying operations and
investments, and has done so for the period under
review.
Key financial highlights
Group revenue has increased by 33% compared to the
prior interim period from R134m to R178m due to the
strong operational performance of the underlying
businesses. The Group`s gross profit margin
increased from 28% to 38% due to greater margins
and efficiencies being achieved from the
Information and Communication Technology ("ICT")
and Fishing operations.
Net profit before taxation for the period has
increased significantly to R19.3m (2011: R8.4m)as
compared to the prior period which is driven
mainly by the subsidiaries` organic growth and
strategies implemented over the past two years.
Headline earnings increased by 38% as a result of
the operational performance of the subsidiaries.
Earnings per share (EPS) grew by 0.47 c from 1.40 c
in 2011 to 1.87 c for the current period and
headline earnings per share (HEPS) grew by 0.51 c
from 1.36 c in 2011 to 1.87 c for the current
period.
This has resulted in the improvement in cash
generation from operations, which compares well
with the cash deficit experienced in the prior
interim period. Cash flows from operating
activities have increased by R26 million compared
to the prior interim period.
The Group`s asset base has increased by R43m to
R783m from R740m for the period under review.
Net asset value (NAV) per share grew to 88.70 c
from 83.62 c in the prior period, while tangible
NAV per share grew to 78.68 c from 68.84 c for the
prior period.
Financial liabilities increased during the period
under review to fund the growth of the Group`s
subsidiaries and associates.
The organic reinvestment in the Information
Technology Communication group is performing above
expectation with operating profits of R26m for the
period as compared to R5m for the prior period.
This was achieved through the implementation and
roll out of the long-term contracts secured during
the prior financial years.
Premier Fishing SA (Pty) Ltd ("Premier Fishing")
achieved an operating profit for the period. This
compares favourably to an operating loss over the
prior interim period. The major contributors were
the pelagic and the south coast rock lobster
("SCRL") divisions as well as improved operational
efficiencies.
The fishing sector generally performs better in the
second half of the year due to the seasonal nature
of the industry.
Strategic investments
Our investments in British Telecom Communication
Services South Africa (Pty) Ltd ("BTSA") and Saab
SA (Pty) Ltd ("Saab") have continued bearing fruit
as the companies have performed above expectations.
The growth of these investments has strengthened
our financial position.
BTSA is a subsidiary of one of the world`s leading
providers of communication solutions and services.
British Telecom operates in 170 countries. BTSA has
performed well during the first half of the year
and has made significant investments in additional
resources to meet increased contract demand.
The value of our investments has increased by 6%
since the previous financial year-end. This
investment has positive growth prospects going
forward.
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 companies.
The ICT division has performed very well, with
subsidiaries performing above targets, and
generating positive cash flow. The division`s
revenue has increased by 87% compared to the
corresponding interim period to R73m from R39m due
to well-performing businesses and efficiencies.
This has placed the division in a strong financial
position.
Saratoga Software (Pty) Ltd, a software development
company which builds custom software solutions for
corporate customers, has grown consistently over
the past few years and is performing ahead of
expectations.
Digital Matter (Pty) Ltd, an innovative technology
company, providing mobile software solutions for a
range of industry applications including industrial
plant and equipment inspection and asset auditing
is also performing above expectations.
Health System Technologies (Pty) Ltd ("HST"), a
hospital information system ("HIS")laboratory
information system ("LIS") and pharmacy information
system integrator and provider, continues rolling
out the centralised HIS and pharmacy solution to
the provincial government of the Western Cape
hospitals with 30 HIS and 22 pharmacy installations
completed. It successfully continues the
implementation of the national centralised LIS for
the National Health Laboratory Services with 130
laboratories of the total 260 laboratories already
successfully rolled out. The business has
consistently performed well over the past few
years. HST is ahead of half-year budget and is
exceeding management`s expectations.
Fishing
Premier Fishing has steadily maintained its
performance with the major contribution from the
pelagic and south coast rock lobster ("SCRL")
division. Interim results show an operating profit
of R1m.
The pelagic division as an industry has improved
with the catching volumes increasing by about 50%
compared to the prior reporting period. Management
is confident that this division and the lobster
division will deliver a strong performance to year-
end due to the seasonal nature of the business.
Aquaculture
The abalone division has produced stable results in
the first half of the year. Management expects this
trend to continue and steadily improve in the
second half of the year.
Healthcare
The healthcare division`s revenue has grown by 49%
in comparison to the prior interim period. The core
dermatological range of products in the
pharmaceutical division continues showing
improvement in performance, despite significant
competition from generic equivalents.
Biotechnology
Genius Biotherapeutics (formerly Bioclones), South
Africa`s leading biotechnology company, is at the
forefront of novel technology treatment for cancer
and infectious diseases. It has received permission
from the Minister of Finance of South Africa and
the South African Reserve Bank to obtain a primary
listing on a foreign stock exchange.
The listing permission will allow South Africa to
benefit from capital investments, employment
creation, increased revenues and taxes and will
also create numerous opportunities for young South
African scientists to be part of the global
scientific community and to be of the cutting edge
of novel technologies in cancer treatment.
The approval was granted subject to a number of
conditions. Genius Biotherapeutics has been working
with its international shareholders, scientific
partners and licensors to ensure that the
conditions can be fulfilled. Shareholders will be
advised accordingly.
Ribotech (Pty) Ltd ("Ribotech"), a subsidiary of
Bioclones, has a production facility for the
manufacturing of Granulocyte-Colony Stimulating
Factor (G-CSF), a product used in the oncology
market. The Ribotech facility has made significant
progress since the upgrade of the production
facility.
Media
espAfrika (Pty) Ltd, a Group subsidiary, has staged
the Cape Town International Jazz Festival since its
inception in 2000.
The company`s performance for the six months is an
expected operating loss, as espAfrika has most of
its events during the second half of the financial
year.
Events after the reporting date
Subsequent to the financial reporting date the
Group concluded a R95m acquisition of a 0.75% stake
in the Pioneer Food Group at a 5% discount to
market value.
Prospects
As an investment holding group we are pleased to
have concluded the Pioneer Food Group transaction.
This acquisition is perfectly aligned with the
Group`s strategy to diversify its business and
enhance the value through strategic investments in
key sectors of the economy.
The Group will focus its efforts on growing the ICT
and fishing divisions organically as well as by
acquisition, as the operations continue producing
satisfactory results.
The ICT and fishing divisions have built a strong
platform for further organic growth and are
positioned well to increase these investments by
acquisition.
Amethst (Pty) Ltd - Parallel arbitration
negotiations to resurrect the Gauteng Department of
Health and Social Development ("GDOHSD") hospital
information system ("HIS") and electronic health
record ("EHR") contracts are ongoing.
The continuous investment in our long-term
sustainable businesses is proving successful. Our
employees, the community and our sustainable
business processes have enabled the Group to be
actively involved in improving stakeholder interest
for the economy of the country.
The Group`s auditors have not reviewed nor reported
on any comments relating to future prospects.
Dividends
No dividends have been declared for the current
period. The board continues working towards the
payment of dividends in the foreseeable future.
Appreciation
We wish to acknowledge the support of our staff,
Group executives, management, our board of
directors as well as our stakeholders and business
partners for their loyalty and dedication to the
company in producing these very satisfactory
results.
Dr MI Surve Mr Khalid
Abdulla
Executive chairman Chief
executive officer
Cape Town
17 April 2012
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,
19 Ameshoff Street, 13th Floor, Rennie House,
Braamfontein, Johannesburg 2000
Auditors: PKF (Cpt) Inc, Cape Town
Sponsor: PSG Capital, Stellenbosch
Date: 17/04/2012 14:33:01 Produced by the JSE SENS Department.
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