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Sekunjalo - Final Audited Results For The Year Ended 31 August 2003
Release Date: 27/11/2003 17:02:00 Code(s): SKJ
Sekunjalo - Final Audited Results For The Year Ended 31 August 2003
Sekunjalo Investments Limited
(Company registration no: 1996/006093/06)
Share code: SKJ ISIN: ZAE000017893
("Sekunjalo")
FINAL AUDITED RESULTS
FOR THE YEAR ENDED 31 AUGUST 2003
FINANCIAL HIGHLIGHTS
- GROUP HEADLINE EARNINGS R16.04m
- GROUP TURNOVER R356.66m
- OPERATING PROFIT R38m
- HEADLINE EPS 18.09 cents
BALANCE SHEET AT 31 AUGUST 2003
GROUP
2003 2002
R"000 R"000
ASSETS
Non-current assets 125 247 140 925
Investment property 350 350
Property, plant and equipment 61 258 61 887
Biological assets 6 370 -
Deferred expenditure 2 160 2 509
Goodwill 8 451 7 859
Intangible assets 4 072 11 192
Pharmaceutical dossiers 28 900 30 600
Investments 6 986 12 741
Deferred taxation - 7 494
Loans receivable 6 700 6 293
Current assets 142 298 162 516
Inventories 31 859 43 174
Trade and other receivables 74 739 62 921
Cash and cash equivalents 35 700 56 421
TOTAL ASSETS 267 545 303 441
EQUITY AND LIABILITIES
Capital and reserves 24 633 21 700
Share capital 1 554 1 554
Share premium 126 283 126 283
Capital redemption reserve fund 7 975 -
Non-distributable reserves 39 39
Accumulated loss (111 218) (106 176)
Outside shareholders" interest 2 151 46 251
Non-current liabilities 144 289 88 879
Interest-bearing borrowings 139 454 88 430
Non-interest-bearing borrowings 914 449
Deferred taxation 2 248 -
Post employment medical costs 1 673 -
Current liabilities 96 472 146 611
Trade and other payables 45 588 56 380
Provisions 8 436 6 796
Current portion of long-term borrowings 13 208 28 805
Bank overdraft 26 308 40 592
Taxation 2 932 14 038
TOTAL EQUITY AND LIABILITIES 267 545 303 441
TOTAL ASSETS 267 545 303 441
- Continued operations 267 545 302 615
- Discontinued operations - 826
TOTAL LIABILITIES 240 761 235 490
- Continued operations 240 761 232 958
- Discontinued operations - 2 532
ABRIDGED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 AUGUST 2003
GROUP
2003 2002
R"000 R"000
Cash flows from operating activities 5 069 32 372
- continued operations 5 069 32 462
- discontinued operations - (90)
Cash flows from investing activities (7 256) (16 055)
- continued operations (7 256) (16 262)
- discontinued operations - 207
Cash flows from financing activities (4 250) 5 516
- continued operations (4 250) 5 070
- discontinued operations - 446
Net (decrease)/increase in cash and
cash equivalents (6 437) 21 833
Cash and cash equivalents at beginning
of year 15 829 (6 004)
Cash and cash equivalents at end of year 9 392 15 829
INCOME STATEMENT FOR THE YEAR ENDED 31 AUGUST 2003
GROUP
2003 2002
R"000 R"000
REVENUE 356 664 346 013
- continued operations 356 664 343 152
- discontinued operations - 2 861
Cost of sales 215 443 186 569
- continued operations 215 443 185 572
- discontinued operations - 997
GROSS PROFIT 141 221 159 444
Other operating income 38 625 20 192
- continued operations 38 625 20 103
- discontinued operations - 89
Gross income 179 846 179 636
Administration, distribution and selling
expenses 141 837 130 429
- continued operations 141 837 127 278
- discontinued operations - 3 151
PROFIT FROM OPERATIONS 38 009 49 207
Finance cost 24 956 24 781
- continued operations 24 956 24 477
- discontinued operations - 304
PROFIT BEFORE TAXATION 13 053 24 426
Income taxation (expense)/gain (10 521) (11 317)
- continued operations (10 521) (11 247)
- discontinued operations - (70)
PROFIT AFTER TAXATION 2 532 13 109
Income from associates 80 4 219
Outside shareholders" interest 9 671 (407)
NET PROFIT FOR THE YEAR 12 283 16 921
TOTAL NET PROFIT FOR THE YEAR 12 283 16 921
- Continued operations 12 283 18 493
- Discontinued operations - (1 527)
Weighted average number of shares 88 689 88 689
Headline earnings per share (cents) 18.09 19.07
Earnings/(loss) per share (cents) 13.85 19.08
Diluted earnings per share (cents) 13.57 18.68
Reconciliation of basic earnings to
headline earnings
Basic earnings 12 283 16 921
Amortisation of goodwill & dossiers 520 528
Amortisation and impairment of patents
and trademarks 685 718
Development costs written off - 56
Profit on disposal of property, plant
and equipment 88 (1 562)
Loss on permanent dimunition of
investment property - 35
Loss on write-off of investments
(net of tax & outside
shareholders" interest) 2 396 109
Software development costs written off 74 113
Headline earnings 16 045 16 918
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 AUGUST 2003
Non-
Share Share distributable Accumulated
capital premium reserves CRRF loss Total
R"000 R"000 R"000 R"000 R"000
GROUP
Balance at
31 August 2001 1 554 126 283 39 (122 510) 5 366
Fundamental
error - - - (587) (587)
Restated balance 1 554 126 283 39 (123 097) 4 779
Net profit from
ordinary
activities - - - 16 921 16 921
Balance at
31 August 2002 1 554 126 283 39 (106 176) 21 700
Fundamental
error - - - - (523) (523)
Restated
balance 1 554 126 283 39 - (106 699) 21 177
Transfer to CRRF - - - 16 802 (16 802) -
Premium on
redemption of
preference
shares - - - (8 827) - (8 827)
Net profit from
ordinary
activities - - - - 12 283 12 283
Balance at
31 August 2003 1 554 126 283 39 7 975 (111 218) 24 633
COMMENT
INTRODUCTION
Sekunjalo Investments Limited is pleased to announce their final results for the
financial year ended 31 August 2003.
The vision of Sekunjalo is to remain one of the pre-eminent black economic
empowerment companies in South Africa, with a transformative but sustainable
business model, that is responsive to the needs of government, civil society,
company employees and shareholders.
This year represented the final stage of the operational restructuring programme
implemented at the end of 2000. The past year was one of consolidation, whereby
the management teams focused on strengthening the balance sheet of the
subsidiaries, thus positioning the company for organic and acquisitive growth in
2004. The success of the restructuring has to be attributed to the strong focus
on the development of the human capital in Sekunjalo.
This year Sekunjalo received two prestigious awards namely, the BusinessMap Top
Market Performer Award and the Black Business Quarterly Award for Top Business
Performance of the Year.
Group Financial Overview
The results show a solid performance by the group, which is all the more
remarkable if the impact of a number of factors are considered:
- the 40% strengthening of the rand/dollar exchange rate in the past financial
year, which has had an effect on the operating margins in the export business in
the fishing and healthcare business units.
- the restructuring process, which was started in the 2000 financial year, now
complete, which resulted in significant restructuring costs.
- some of the costs of the increased shareholding in Premier Fishing from 56% to
an effective 80% is carried in the income statement.
The result is that the short-term costs and effects of restructuring has created
a solid platform for long-term growth and sustainability.
Financial highlights are as follows:
Headline earnings for the group R16.04m
- The group achieved a turnover of R356.66m
- Operating profit achieved was R38m
- Headline earnings per share of 18.09 cents
- Earnings per share of 13.85 cents
Review of Investments
Premier Fishing South Africa Pty Ltd
Premier Fishing is the only large major black controlled and managed fishing
company in South Africa. During the year under review, Premier Fishing"s
empowerment credentials were significantly strengthened through Sekunjalo
increasing its ownership from 56% to an effective 80% stake. The balance of 20%
is held by management and staff, which has positioned Premier well for the
allocation of long-term rights in 2005.
Premier Fishing"s strong presence in a growth market like China has ensured good
performance from live West Coast Rock Lobster sales. The South Coast Rock
Lobster business has delivered a strong performance despite a softening of
prices in the American market. The squid sector has had record landings in the
past year which has made a significant contribution to turnover. In the Pelagic
sector, pilchard catches have been poor which has affected the entire industry
involved in that sector. The company"s focus on developing brands has seen a
greater contribution from its branded products such as Pecks, Redro and Seagro.
Pecks and Redro have increased market share in the spreads market. A focused
advertising campaign has resulted in significant sales growth in these brands in
the past year.
Premier Fishing is well positioned to continue with its strong performance and
is currently in the process of increasing its product range through seeking new
ventures in fishing on the African continent. A major challenge is managing the
business through the exchange rate volatility and cost escalations due to
inflation whilst realisation prices in dollar terms remain static or decline.
Sekunjalo Health Care Ltd (SHC)
The past financial year saw the completion of the significant restructuring
initiatives undertaken in SHC. SHC has had to overcome significant challenges in
a highly competitive environment where multinationals see South Africa as the
country to establish their base for Africa. The strengthening of the Sekunjalo
Group balance sheet will now enable SHC to use its operating cash flow to grow
the businesses.
The board has strategically cut costs, closed non-value adding facilities,
refocused the operating units and sought innovative methods to fund growth of
operations and restructure the Group. SHC will focus on pharmaceuticals and
dispose of equity stakes in some subsidiaries. The businesses have been
decentralised and have focused management teams with `buy-in" options.
Sekpharma (Pty) Ltd
Sekpharma is the pharmaceutical subsidiary of SHC. Sekpharma continues to build
on its relationship with multinational pharmaceutical companies. The base
infrastructure has been successfully bedded down and exploiting new marketing
opportunities will deliver the necessary returns. Sekpharma is poised to become
a significant pharmaceutical company in the market place.
At year-end Sekunjalo Investments Limited, the controlling shareholder of SHC,
acquired the 40 % equity of Futuregrowth as part of the proposed Rights offer
transaction. Details are contained elsewhere in this announcement.
New Promex Corporation
New Promex Corporation is the first management equity `buy in" purchase into
operations with funding support. Promex is the market leader in the manufacture
and supply of strongly branded hypodermic syringes, needles, alcohol swabs and
related products. It is the dominant supplier to government.
Rapimed Diagnostics
Rapimed, with its branded product, Uricheck, is one of the few African rapid
diagnostic-manufacturing companies. Rapimed products include urine diagnostic
strips, pregnancy diagnostic strips as well as HIV/Aids rapid diagnostic kits.
Past expertise in developing rapid test kits has been followed up by the
development of rapid diagnostic strips for testing pool chemicals, demonstrating
responsiveness to challenges posed by global companies.
The company is in the final stage of receiving ISO 9002 accreditation which will
allow it to significantly increase its exports into the European market.
Health System Technologies Pty Ltd (HST)
Health System Technologies continues to impress with its successful rollout of
the health information systems (HIS) in the Provincial Administration of the
Western Cape hospitals of Groote Schuur, Tygerberg and Red Cross Children"s
Hospital. This has resulted in significant value enhancement for the Province
through the implementation of the software. The Province recently extended the
rollout to include secondary hospitals and clinics.
Sekunjalo Informatics
Sekunjalo through its information technology interests in Sekunjalo Enterprise
Management Technology Pty Ltd (Semtech) is currently exploring partnerships and
joint ventures for this niche software product developer specialising in
manufacturing workflow and Web accounting.
Prospects
The prospects for the group are positive.
Sekunjalo"s strategic thrust is to integrate the core competencies, which the
group has developed in its business units, as well as the skilled and competent
leadership teams with sophisticated networks in the private and public sector.
Furthermore, the group intends to control the companies in which it has
invested, resulting in the acquisition of minorities" interest in the fishing
and health care business units.
The core competence which the group developed in the pharmaceutical and
diagnostic sectors will be strengthened by the further acquisition of generic
dossiers and branded pharmaceutical products which will enable it to assist
government in the rollout of anti-retrovirals for the treatment of HIV/AIDS
patients. The innovation in diagnostic technology will result in additional
products being developed, to increase Sekunjalo"s growth in the export market.
Impending ISO 9002 accreditation for the Rapimed products should significantly
enhance these prospects. Premier Fishing, with its sustainable fishing quotas,
continues to generate strong export markets for its products. Sekunjalo is
therefore well placed to deliver a solid performance in the year ahead.
The proposed R80 million rights offer along with a significant strengthening of
the balance sheet has created a solid platform for organic and acquisitive
growth.
Sekunjalo and its advisers have issued summons on Deloitte & Touche Tohmatsu to
recover R160 million, a substantial part of its investment in LeisureNet.
Shareholders will be kept informed of developments through the media in the
coming year.
Accounting Policies
The results for the year ended 31 August 2003 have been prepared in accordance
with the South African Statements of Generally Accepted Accounting Practice, the
requirements of the South African Companies Act and the Listing Requirements of
the JSE Securities Exchange South Africa and with those applied in previous
financial periods.
These results have been audited by the group"s auditors, Fisher Hoffman PKF
(Newlands) and their unqualified audit opinion is available for inspection at
the company"s registered office.
Appreciation
The excellent performance of the group would not have been possible without the
support of the Board of Directors. The added value, guidance, patience and
experience provided by them is highly appreciated. We thank all our employees
for their contribution, without which the success of this company in the past
year would not have been possible.
By order of the Board
Dr WA Mgoqi
Chairman
Chief Executive
Cape Town,
27 November 2003
Directors
Dr WA Mgoqi (Chairman),
Dr MI Surv (Chief Executive Officer),
MY Kajee,
F Kahn (Financial Director),
AJ Snyders,
KC Patel,
Z Kota,
D Case
*Executive Director
PR Phillips (Company Secretary)
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share Code: SKJ
ISIN: ZAE000017893
("Sekunjalo")
Registered Address:
5th Floor, Protea Place
Protea Road, Claremont
Transfer Secretaries:
Computershare Limited
70 Marshall Street
Johannesburg, 2001
Sponsors: Nedbank Corporate
