| Mon 30 Apr 2012, 9:40 | | SKY - Sea Kay Holdings Limited - Reviewed condensed interim group results for |
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SKY
SKY
SKY - Sea Kay Holdings Limited - Reviewed condensed interim group results for
the six months ended 31 December 2011
Sea Kay Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/004967/06)
JSE code: SKY
ISIN: ZAE000102380
("Sea Kay" or "the group" or "the company")
REVIEWED CONDENSED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2011
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
Six Six Year
months months ended
ended ended
31 31 30 June
December December 2011
2011 2010
R000 R000 R000
Revenue 102 068 84 462 186 286
Operating loss (131 282) (26 389) (48 819)
Investment revenue 38 326 1 051
Other income 59 4 992 20 676
Finance costs (4 942) (10 871) (16 428)
Share of profit in associate 2 217 6 029 (2 740)
Loss before taxation (133 910) (25 913) (46 260)
Taxation (7) 16 177 15 428
Loss from continued and (133 917) (9 736) (30 832)
discontinued operations
Loss from continued operations (133 917) (9 736) (30 832)
Allocated as follows:
Equity shareholders of Sea Kay (133 917) (9 736) (30 832)
(133 917) (9 736) (30 832)
Reconciliation of headline loss:
Loss attributable to equity (133 917) (9 736) (30 832)
holders
Less: Profit on sale of property, 115 649 - (8 020)
plant and equipment
Add: Loss on disposal of
associate
Add: Impairment of goodwill - - 10 070
Add: Impairment of assets held - 1 000 73
for sale
Headline loss (18 268) (8 736) (28 708)
Weighted average number of shares 488 864 488 864 488 864
in issue (000)
Loss per share from continuing (27.39) (1.99) (6.31)
and discontinued operations
(cents)
Loss per share from continuing (27.39) (1.99) (6.31)
operations (cents)
Headline loss per share from (3.74) (1.79) (5.87)
continuing and discontinued
operations (cents)
Headline loss per share from (3.74) (1.79) (5.87)
continuing operations (cents)
CONDENSED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
31 31 30
December December June
2011 2010 2011
R000 R000 R000
ASSETS
Non-current assets 16 912 185 075 149 855
Property, plant and equipment 16 885 24 743 18 900
Intangible assets 20 - 8
Assets held for sale - - 20 428 -
Discontinued operations
Investment in associate - 139 834 130 933
Deferred tax 7 70 14
Current assets 47 848 122 774 73 734
Inventories 4 907 5 395 3 981
Trade and other receivables 33 805 58 720 44 179
Loans and receivables - 899 -
Amounts due by customers 7 936 41 576 24 592
Cash and bank balances 1 200 16 184 982
Total assets 64 760 307 849 223 589
EQUITY AND LIABILITIES
Total equity (101 048) 53 790 32 869
Issued capital 170 076 170 077 170 076
Retained earnings (271 124) (116 287) (137 207)
Non-current liabilities 11 308 102 072 63 862
Loans payable 11 308 26 076 10 917
Interest-bearing loans - 55 157 -
Other financial liabilities - - 52 945
Liabilities held for sale - - 20 839 -
discontinued operations
Current liabilities 154 499 151 987 126 858
Trade and other payables 69 759 59 683 76 033
Other financial liabilities 74 527 20 542 31 898
Current portion of interest- - 63 807 -
bearing loan
Current tax payable 4 299 4 508 4 564
Current portion of finance - 3 400 1 082
lease obligation
Excess billing over work 5 738 - 13 089
performed
Operating lease liability - 47 24
Loans Payable 173 - 167
Bank overdrafts 3 - 1
Total equity and liabilities 64 760 307 849 223 589
Number of shares in issue at 488 864 488 864 488 864
period end (000)
Net asset value per share (20.67) 11.00 6.72
(cents)
Net tangible asset value per (20.67) 11.00 6.72
share (cents)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
Six months Six Year
ended months ended
ended
31 December 31 30 June
2011 December 2011
2010
R000 R000 R000
Balance at beginning of period 32 869 107 845 107 846
Net loss for the period (133 917) (9 736) (30 832)
Loss of control of subsidiary - (44 319) (44 145)
Balance at end of period (101 048) 53 790 32 869
CONDENSED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
Six Six Year
months months ended
ended ended
31 31 30 June
December December 2011
2011 2010
R000 R000 R000
Cash flows from operating 3 511 12 486 15 786
activities
Cash flows from investment 357 (35 279) (30 922)
activities
Cash flows from financing (3 652) (16 219) (41 448)
activities
Total movement for the period 216 (39 012) (56 584)
Cash and cash equivalents at 981 55 196 57 565
beginning of period
Cash and cash equivalents at end 1 197 16 184 981
of period
SEGMENTAL REPORTING Building, Civil Total
material engineering
supply and
development
R000 R000 R000
Period ended 31 December 2011
Revenue 102 068 - 102 068
Loss before tax (133 910) - (133 910)
Total assets 64 760 - 64 760
Total liabilities 165 807 - 165 807
Period ended 31 December 2010
Revenue 84 462 - 84 462
(Loss) / profit before tax (25 913) - (25 913)
Total assets 307 849 - 307 849
Total liabilities 254 059 - 254 059
Year ended 30 June 2011
Revenue 186 286 - 186 286
(Loss)before tax (46 260) - (46 260)
Total assets 223 589 - 223 589
Total liabilities 190 720 - 190 720
NOTES
Lonerock`s vendors have exercised their right to re-purchase all of their shares
previously held in the company (49.99%). The financial effect of the
transactions are set out below.
Six
months
ended
31
December
2011
R000
Carrying amount of investments 133 149
in associate: Lonerock
Value of shares sell-out due to (17 500)
exercising of option to re-
purchase shares by Lonerock
vendors
Group loss on sell-out of 115 649
Lonerock investment
GROUP PROFILE
Sea Kay currently operates in Gauteng the Western Cape and in Kwa-zulu Natal in
the construction of mass housing through Sea Kay Engineering Services (Pty)
Limited ("Sea Kay Engineering") and Sea Kay Engineering Services Western Cape
(Pty) Limited ("Sea Kay Western Cape") and Sea Kay Engineering Services Kwa-Zulu
Natal (Pty) Ltd. ("Sea Kay KZN").
TRADING CONDITIONS
Although Government spending on infrastructure generally declined since the
large world cup and related projects during 2008 to 2010, the smaller
construction companies have seen good investment by Government in the low cost
housing sector. The GAP market (affordable housing for the household income
group of between R3,501 to R10,000 per month) has seen some improvement and the
growing demand is assisted by banks that are slowly easing the lending criteria.
The backlog of and need for housing in the low cost and Gap market is widely
accepted to be growing and in the region of approximately 2 million and 500 to
800 thousand units respectively. These factors will benefit the Company going
forward provided that access to proper working capital can be achieved as set
out in more detail hereunder.
OPERATIONAL OVERVIEW
The Company maintained turnover similar to the prior comparable period which is
still not adequate. During the period under review, operations and offices have
been established in KwaZulu-Natal and some projects have commenced. Due to the
lack of proper working capital those projects could not yet be accelerated to
acceptable levels. In Gauteng the same problem occurred and a working capital
injection is required to accelerate to increase turnover to reach profit levels.
In the Western Cape, however, the subsidiary benefitted from the restructuring
process to operate independently from the rest of the group and grew to
acceptable levels reaching a profit level of R1,7 million during the period.
Internal focus will be turned to this subsidiary to ensure this profitable trend
can be extended and grown to assist the other regions to follow suit. Overall
the Groups` performance for the period continued to be below expectations, the
main reason still being the lack of proper working capital. The positive
operational performance in the Western Cape indicated the way to recovery but it
would need to be complemented with adequate working capital to ensure the
current pipeline in Gauteng and KwaZulu-Natal can be accelerated to profitable
levels.
LONEROCK
Due to the fact that the Group suffered from extremely slow payments from
Government during late 2007 to the end of 2009 as well as the completion of two
unprofitable projects during the same period, the Lonerock vendors could not be
paid in full and the Lonerock investment on the balance sheet had to be disposed
of, after the options to repurchase their Lonerock shares have been exercised.
Those actions conclude this chapter in the Company and in line with the
restructuring and turn-around strategy previously announced the company will now
refocus its efforts to the new initiatives partially successfully completed to
replace and remedy the negative financial effect left with the departure of
Lonerock from the Group. More detail about the initiatives is discussed
hereunder.
PROSPECTS
Management is looking to stabilize the company and create sustainability through
an increased pipeline of work supported by adequate working capital. Government
spending on housing and housing infrastructure is expected to grow aggressively
during the next two years as the public protest about the lack of service
delivery is reaching alarming levels supported by Governments` expressed
intention to address the backlog in the low cost and GAP market sector. In line
with the turn-around strategy management also recognised the need to diversify
operations to commercial and private sector developments to ensure that the
dependency of the Company on Government related work is decreased. With this
diversification management is confident that Government` housing and
infrastructure initiatives can better be assisted while the overall risk profile
of the Company will decrease accordingly.
Post half year end the Company concluded an agreement to acquire a large
commercial and residential property development in the private sector subject to
all the conditions and regulatory approvals as set out in the previous
announcement dated 18 April 2012. This transaction represents the first step
towards achieving a sustainable pipeline outside of Government work and will
substantially increase the net asset value of the balance sheet. The company
also announced the negotiations with two other property development owners
regarding the acquisition of an upmarket retirement village development in Cape
Town and a lifestyle property development in KwaZulu-Natal. The aim is to
increase and complement the larger property development already secured with a
short to medium term commercial and residential pipeline of work in both the
property development and the construction sectors.
Once the need for adequate working capital has been satisfied through the fund
raising process described hereunder management is confident that the pipeline of
Government and commercial private sector work can be complemented by selective
contracts across border into neighboring countries.
RESTRUCTURING OF THE COMPANY
The formal fund raising process announced previously will, once achieved, result
in the finalisation of the restructuring process. Management is aware of all the
challenges regarding the going concern and is confident to manage the Company
through the fund raising process to achieve sustainability and profitability in
all the various subsidiaries.
GOING CONCERN
The continued uncertainties identified by management and alluded to in the
auditor`s audit opinion about the going concern is carefully considered and
addressed through the restructuring process involving the fund raising exercise
and the operational capability of the Company to address the concern. The
Company will base its` operational activities on the success achieved in the
Western Cape to ensure that stakeholder value is properly protected through
efficient management of resources and successful completion of current projects
with the view that the raising of funding through debt and equity can be
achieved against the prospects of the increased value on the net asset value of
the balance sheet through the property transaction already concluded.
DIVIDENDS
No dividend will be paid in respect of the period under review.
FINANCIAL PREPARATION
The interim results for the six months ended 31 December 2011 have been prepared
in accordance with and contain the information required by IAS 34: Interim
Financial Reporting, International Financial Reporting Standards ("IFRS"), AC500
Standards as issued by the Accounting Practices Board or its successor, the
Companies Act no 61 of 1973 and the Listings Requirements of the JSE Limited.
The accounting policies applied, which are in terms of IFRS, are consistent with
those of the annual financial statements for the year ended 30 June 2011, as
described in those financial statements
REVIEW OPINION
Nexia SAB&T has issued a qualified review opinion on the results for the period
ended 31 December 2011, which opinion is available for inspection at the
company`s registered office.
The review opinion contains the following paragraph:
"The Group reported a headline loss attributable to the owners of the parent of
R 18,268,000 for the period ended. The liabilities of the Group exceed its
assets by R 101,048,000 and significant pressures on liquidity have been
experienced during the period under review.
The ability of the Group to honour its commitments and provide adequate working
capital to sustain its operations are dependent on a combination of factors
including the successful outcome of negotiations, procuring additional funds for
working capital and/or refinancing certain operations as well as a return to
profitability.
The uncertain outcome of these events indicate material uncertainties which cast
doubt on the Groups ability to continue as a going concern and the Group may
therefore not be in a position to realise its assets and discharge its
responsibilities in the normal course of business."
DIRECTORATE AND SECRETARIAT
By order of the board.
P VAN DER SCHYF
Chief executive Officer
30 April 2012
Registered office and postal address
7 Patton Street, Duncanville, Vereeniging, 1939
PO Box 925, Meyerton, 1960
Website
www.seakay.co.za
Directors
LJ Mahlangu* (chairperson), P van der Schyf (CEO), AV Green*, BW Marais*
*non-executive
Company secretary
M Hattingh
Transfer secretaries
Link Market Services South Africa (Pty) Limited
Auditors
Nexia SAB&T , Registered Auditors, Chartered Accountants (SA)
Sponsor
Vunani Corporate Finance
Date: 30/04/2012 09:40:00 Produced by the JSE SENS Department.
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