| Thu 12 Sep 2002, 15:33 | | Excellerate Holdings Limited - Results For The Yea |
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Excellerate Holdings Limited - Results For The Year Ended 30 June 2002
Excellerate Holdings Limited
Registration number 1997/009884/06
Share code: EXL ISIN: ZAE000026092
RESULTS FOR THE YEAR ENDED 30 JUNE 2002
- operating profit up 28%
- turnover up 14%
- headline earnings up 12%
- important acquisitions made
- successful move to JSE Business Support Services
FINANCIAL OVERVIEW
Excellerate has delivered satisfactory results in its second year under a new
executive team and against a backdrop of international developments that
affected domestic financial stability in South Africa.
The events of September 11 posed an enormous systemic risk to financial economic
systems worldwide. The contagion effects of these attacks, adverse developments
in Zimbabwe and the volatility and vulnerability of the Rand particularly
affected our ExcellTrade Division.
Strong organic growth, and the execution of sound business practices, based on
controlling and improving the return on funds employed, resulted in an increase
in operating profit of 28%, an improvement in turnover of 14% and an increase in
headline earnings of 12%. Cash resources were put to good use in the second half
of the financial year when certain strategic acquisitions were made.
Headline earnings per share have been affected by funding and capital costs
attributable to acquisitions that could not be deducted for tax purposes. The
acquisitions have not contributed significantly to these results, but we expect
their contribution to be emphatically felt in the year ahead.
Excellerate owns cash generative businesses, remains financially strong,
relatively ungeared, and stands poised for positive growth even under current
market conditions.
We are currently in both a building and consolidation phase. We will build
through acquisitions and by growing the group`s existing base. We will
consolidate by strengthening management and the trading and service foundations
already laid. This focus will maximise organic growth and optimise the benefits
of acquisitions already made and of those to be made.
OPERATIONAL REVIEW
Excellerate invests in businesses that focus on services, trading and
distribution, with the emphasis on customer-centricity and specialised markets.
We are focused into two groupings, Services and Trading-Distribution. Our unique
business recipe focuses on operational excellence and the extraction of maximum
value from our business operations. This is amply demonstrated by the impressive
growth in the operating profit of the group.
The ExcellTrade Division, which houses the Trading - Distribution grouping,
performed satisfactorily in light of the volatile exchange rate and a general
slow-down in the sector. The international housewares business, Louis Smiedt,
did not meet the group`s earnings growth expectations and a decision was taken
at the end of the first quarter to merge Louis Smiedt with the Hypertrade
housewares business. The merger commenced in January 2002 to prevent
interference in the trading of the businesses over the Christmas season. The
merger and the concomitant costs of relocation, rationalisation and the overall
performance of Louis Smiedt have adversely affected the results of the group.
The merged business, Hypertrade-Louis Smiedt, is expected to contribute
positively to earnings in the year ahead.
Notwithstanding the merger process, turnover grew 18% from R135 million to R160
million and operating profit increased by 26% from R5,8 million to R7,4 million,
with the Goldenmarc housewares and textile business performing exceptionally
well.
The ExcellServ Division continued to perform well due to ongoing efficiencies
and the introduction of new product offerings within the services businesses.
Turnover grew 6% from R84 million to R89 million and operating profit increased
by 31% from R8 million to R10,5 million.
Interpark performed in line with expectations despite incurring substantial
costs in its tender for the parking at Johannesburg and Durban International
Airports. The Airports Company terminated the tender process, following its
decision to handle the parking in-house. Interpark continues to have very good
prospects.
ACQUISITIONS
In the second half of the year the group acquired:
- the business of Levingers Dry Clean and Shoe Clinic and other associated dry-
cleaning, shoe repair and tailoring businesses ("Levingers"). The motivation for
the acquisition was to expand the service offering of the ExcellServ Division
beyond the normal commercial and industrial markets to include individual
consumers and to take advantage of the synergies within the Parking Environment
Management ("PEM") Division and other group companies.
- certain assets, employees and contracts of the Cleancare Group to be absorbed
into Sterikleen, the group`s cleaning, washroom, hygiene, hospitality services
and pest control business.
- certain assets of the Alpine food importing and distribution business and the
Fruti Flow frozen confectionary business, which traded within the Afribrand
Group (in liquidation). This acquisition was aimed at expanding the trading
offering of the ExcellTrade Division by entering into the manufacture and
distribution of fast moving consumable food products, alongside the distribution
of branded international and local non-food products.
- a 70% interest in Creative Tension (Proprietary) Limited, a software company
which specialises in the design and production of parking software and
associated technology, to expand and enhance the product offering of Interpark.
PROSPECTS
The effect and contribution of the new acquisitions will be felt in the year
ahead. They have yet to be bedded down and integrated properly into the group in
general and the ExcellServ and ExcellTrade Divisions in particular. Their
contribution to the group as at 30 June 2002 was not significant.
Since 30 June 2002 Levingers has opened additional stores at Eastgate and
Dainfern with other Gauteng based stores being planned for the year ahead. This
expansion includes a national roll-out programme, which will, over time, give
Levingers a national footprint. Levingers has also provided Excellerate with an
opportunity to introduce convenient dry-cleaning, shoe repair and tailoring
services within the PEM Division of ExcellServ. This will be achieved by
locating new depots with separate branding in selected parking facilities
managed by PEM`s Interpark operation.
The Alpine business is a nationwide marketer and distributor of local and
imported premium food products under the Sunkist, Debras, Goldbees and Fruti
Flow house brand names, as well as other leading international and local brands.
The Alpine business had to be resurrected from liquidation and has to be rebuilt
into a fully operational national business. It is expected to contribute
significantly to the earnings of the group in the year ahead as most of its
agency lines and listings at all national mass merchant retailers have been
secured.
The Fruti Flow business is a manufacturing operation which produces trademarked
patented and packaged frozen confectionary. Distribution into mass-merchant
retailers takes place primarily through the Alpine business. Fruti Flow is
enhancing its manufacturing capabilities and product lines, which will help to
grow the Alpine business. Excellerate is exploring other opportunities within
the food manufacturing industry as part of its philosophy of controlling the
source and the distribution channels of its products.
Export opportunities, which certain businesses in the group have been working
on, notably FoodServ, Goldenmarc and Fruti Flow, are expected to yield positive
results in the year ahead and will offset the negative earning implications of
the weaker Rand.
The group will continue to focus on organic and acquisitive growth, and certain
other new and exciting initiatives will provide material earnings growth in the
year to come.
DIRECTORATE AND OTHER APPOINTMENTS
During the year under review Charel Viljoen resigned as an executive director
for personal reasons. Dennis Jacobson, the managing director of Louis Smiedt,
resigned in order to immigrate to Australia.
At ExcellCorp, the group`s headquarters, a further investment has been made in
strengthening management and infrastructure to ensure that divisional
performance is optimised. Peter Kramer has been appointed as Divisional Chairman
of ExcellServ and Alan Lipchin as Divisional Chairman of ExcellTrade.
NEW JSE SECTOR
Excellerate has been transferred to the Cyclical Services Sector of the JSE
under sub-sector: Business Support Services, which most appropriately describes
the nature of the group`s business.
DIVIDEND
Congruent with the group`s current policy, no dividend has been declared in
light of the group`s desire to utilise its resources to finance selective
acquisitions and further growth within the existing divisions.
INDEPENDENT REVIEW
The financial information contained in this announcement has been prepared in
accordance with policies which are consistent with Statements of South African
Generally Accepted Accounting Practice and those of the previous year.
The group`s auditors KPMG Inc have reviewed the financial information for the
year ended 30 June 2002. Their report is available for inspection at the
registered office of the company.
For and on behalf of the Board
L Rottanburg B Bernstein
Executive Chairman Financial Director
Sandton, 12 September 2002
INCOME STATEMENT
Reviewed Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
Turnover 249 097 219 352
Operating profit 17 812 13 910
Capital items - disposal of
fixed assets 140 1 242
Amortisation of trademarks (106) (88)
Amortisation of goodwill (3 308) (2 010)
Net income before interest
and taxation 14 538 13 054
Net interest (paid)/received (1 332) 827
Net Income before taxation 13 206 13 881
Taxation (4 872) (4 580)
Net income after taxation 8 334 9 301
Attributable to minority shareholders (168) (96)
Attributable to ordinary shareholders 8 166 9 205
Shares in issue (000`s) 181 068 184 762
Weighted average number of
shares in issue (000`s) 181 942 171 436
Fully diluted weighted average
number of shares in issue (000`s) 200 730 180 436
Earnings per share (cents) 4,5 5,4
Headline earnings per share (cents) 6,3 6,0
Fully diluted headline earnings
per share (cents) 6,0 5,8
Reconciliation of headline earnings:
Attributable to ordinary shareholders 8 166 9 205
Adjusted for:
- Amortisation of goodwill 3 308 2 010
- Net profit on sale of fixed assets (140) (1 242)
- Taxation thereon 42 237
Headline earnings 11 376 10 210
BALANCE SHEET
Reviewed Audited
30 June 30 June
2002 2001
R`000 R`000
Assets
Non current assets 89 637 66 874
Fixed assets 12 264 7 842
Investments 1 526 270
Intangibles 64 935 48 717
Deferred taxation 10 912 10 045
Current assets 101 426 87 932
Liquid funds 3 014 25 765
Other current assets 98 412 62 167
Total assets 191 063 154 806
EQUITY AND LIABILITIES
Equity and reserves 105 107 99 256
Ordinary shareholders` interest 104 780 99 097
Outside shareholders` interest 327 159
Non current liabilities
Long term loans 1 455 1 601
Current liabilities 84 501 53 949
Other current liabilities 70 577 48 767
Amounts due to vendors 13 924 5 182
Total equity and liabilities 191 063 154 806
Shares in issue (000`s) 181 068 184 762
Net asset value per share (cents) 58,0 53,7
Net tangible asset value per
share (cents) 22,2 27,4
CASH FLOW STATEMENT
Reviewed Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
Cash generated by operations 13 604 30 696
Net interest (paid)/received (1 332) 827
Taxation paid (2 101) (31)
Cash flow from operating activities 10 171 31 492
Cash flow from investing activities (28 909) (37 262)
Cash flow from financing activities (3 723) 27 700
Net cash resources (utilised)/
retained for the year (22 461) 21 930
Foreign exchange gain (290) 216
Net cash resources at
beginning of year 25 765 3 619
Net cash resources at end of year 3 014 25 765
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS` INTEREST
Ordinary Non-
Share Share distributable Retained
Capital premium reserve earnings Total
R000`s R000`s R000`s R000`s R000`s
Balance at
30 June 2000 1 381 29 798 18 734 13 671 63 584
Shares issued 467 27 408 27 875
Foreign currency
Translation 216 216
Net profit for the year 9 205 9 205
Retribution for breach
of warranty (1 783) (1 783)
Balance at 30
June 2001 1 848 57 206 17 167 22 876 99 097
Treasury shares held (37) (2 156) (2 193)
Foreigh currency
translation
reversal for the year (290) (290)
Net profit for the year 8 166 8 166
Balance at 30 June 2002 1 811 55 050 16 877 31 042 104 780
SEGMENTAL REPORT
Reviewed Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
Turnover 249 097 219 352
Service 89 492 84 243
Trading - Distribution 159 605 135 109
Operating profit 17 812 13 822
Service 10 444 7 993
Trading - Distribution 7 368 5 829
Transactions between segments are conducted on an arm`s length market-related
basis
ADDITIONAL INFORMATION
Reviewed Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
1. Capital expenditure 4 296 8 075
2. Depreciation 3 519 2 440
3. Net interest (paid)/received (1 332) 827
Interest received 658 1 828
Interest paid (1 990) (1 001)
4. There are no material capital expenditure
commitments or contingent liabilities
REGISTERED OFFICE: Block F, Ground Floor, Pin Mill Farm, 164 Katherine Street,
Sandown 2169. PO Box 785448, Sandton 2146. Tel: (+27 11) 444-0474. Fax: (+27 11)
262-0360. E-mail: anne@excellerate.co.za
DIRECTORS: L Rottanburg (Executive Chairman), B Bernstein, H Bloch, J Joseph, S
Lewis*, Dr. D Molapo*, A Stewart (*Non-executive Director)
COMPANY SECRETARY: ER Goodman Secretarial Services CC (represented by E
Goodman). Ground Floor, 25 Rudd Road, Illovo 2196. Tel: (+27 11) 447-1713
SHARE TRANSFER SECRETARY: Computershare Services Limited, 2nd Floor, Edura
House, 41 Fox Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107. Tel:
(+27 11) 370-7700. Fax (+27 11) 836-0792
Date: 12/09/2002 02:00:00 PM Produced by the JSE SENS Department
