| Tue 23 Mar 2004, 18:03 | | Results For The Six Months Ended 31 Dec 03 |
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Excellerate Holdings Limited - Unaudited Results For The Six Months Ended 31
Release Date: 23/03/2004 17:02:11 Code(s): EXL EXLD
EXCELLERATE HOLDINGS LIMITED - UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2003
Registration number 1997/009884/06
Share code: EXL
ISIN: ZAE000026092 EXLD ISIN: ZAE000044145
(Incorporated in the Republic of South Africa)
("EXCELLERATE")
Unaudited results for the six months ended 31 December 2003
Financial overview
On 30 January 2004, Excellerate issued a trading update and cautionary
announcement indicating that the group"s results for the six months ended 31
December 2003 would be materially lower than that of the prior comparative
period. During this period to 31 December 2003, the group continued to generate
good trading margins, despite the impact of the strong rand and the consequent
deflationary effects on prices coupled with difficult trading conditions. The
results for this period have been affected by once-off costs relating to the
restructuring of the organisation, seeing the departure of the former executive
chairman, the moving of the two former divisional chairmen into operational
roles heading up the Soft Services and Parking Environment Management divisions
and various other efforts in streamlining the business.
Revenue for the six months ended 31 December 2003 increased by 5,4% to R201,3
million. Operating income before a gratuity payment of
R1,7 million to the former executive chairman and before amortisation and
impairment of goodwill of R2,6 million was fairly constant with a small increase
of 0,1% to R11,9 million. Headline earnings per share decreased by 8,2% to 3,2
cents per share, mainly due to the gratuity payment.
Cash generated by operations improved by R8,3 million to a positive cash flow of
R3,9 million, mainly due to better overall management of working capital. Net
interest paid reduced by 13,5% to R2,3 million from R2,7 million, largely due to
the decrease in interest rates. Cash generated by operations was mainly utilised
to pay for the balance of R5,1 million owing on the acquisition of Ferrengi in
the previous financial year, as well as the acquisition of the Greenmachine
office plant and landscaping business during the current reporting period, and
to reduce financial liabilities.
Operational overview
Services
The Services segment of the business produced a steady revenue of R57,9 million,
representing a modest increase of 1,4% on the previous period and a decrease in
operating profit from R4,2 million to R2,1 million. This decrease in operating
profit was mainly due to the need to provide for additional expenses in
restructuring the business and resolving several operational inefficiencies in
the Parking Environment Management (PEM) division.
In the PEM division, the focus has been on right-sizing the business and
rationalising where appropriate, as well as ensuring there is a good team of key
management in place. The inefficiencies have mostly been resolved and the
business is now on track to achieve a much-improved operational efficiency.
The Soft Services division, comprising Sterikleen and Autoclenz, has achieved
steady results in its cleaning, hygiene and pest control businesses and the
office plant and landscaping business acquired during this reporting period has
performed well. Since the early part of this reporting period, the focus has
been on improving operational efficiencies in this division, and the results of
these ongoing efforts are likely to be realised in the months ahead.
The Consumer Services division, comprising the Levingers Dry Cleaning business,
has performed well as in the past, contributing a dependable margin to the group
results. Additional stores are being opened in key areas in line with the
business" growth strategy.
Trading - Distribution
The Trading - Distribution segment of the business improved its revenue by 7,1%
to R143,3 million and its operating profit by 6,5% to R8,2 million. Foodserv,
the catering equipment trading and manufacturing business, has performed well in
this reporting period, with exports into Africa. Despite the stronger rand, the
business remained relatively well hedged with no significant impact on the
manufacturing margins.
The Food trading division had a difficult trading period with Alpine Importers
generating operational losses, due mainly to pressure on prices resulting from
the stronger rand coupled with a high fixed overhead structure and sub-scale
volumes. Management are in the process of evaluating various alternative
solutions to redress this situation.
The initiatives to turn the Alpine business into a profitable entity represents
the final phase of restructuring of the group which began with the appointment
of the current new management team. The board is hopeful that the alternatives
will allow the group to begin to generate returns on its investment in Alpine
Importers that are expected by shareholders. The board is of the opinion that
food trading and distribution represents a significant opportunity to the group
and it therefore has a preference for following an expansion strategy at Alpine
Importers. The Fruti Flow business is undergoing various operational
enhancements to take advantage of the high demand for its products.
The Housewares division comprising the businesses of Goldenmarc, Hypertrade,
Louis Smiedt and Ferrengi produced exceptional results with continued growth on
previous periods.
Empowerment
As part of its commitment to the imperatives of Black Economic Empowerment
("BEE"), on the 20th February 2004 Excellerate announced the signature of a
contract with a community-based non-profit organisation Ikamva Labantu, which
focuses on social development projects. Ikamva Labantu has thereby taken up a
51% shareholding in the Katanga group of companies that operates as
Excellerate"s BEE partner, with Excellerate holding the remaining 49%.
Management considers this to be a major step towards implementing a meaningful
broad-based BEE program, opening the way to job opportunities for Ikamva
Labantu"s historically disadvantaged individuals and providing Excellerate with
a distinct advantage in addition to new business opportunities through
this partnership.
Excellerate is exploring the possibilities of a further BEE transaction at the
level of the holding company, where a suitable BEE partner may fulfil a more
active role in the ongoing business of the Excellerate group.
Prospects
The prospects for the second half of the financial year are expected to be
better than the first half, with much effort having been put in by the various
teams in sorting out operational inefficiencies, particularly in the services
segment. Although it is expected to take some time before the Alpine trading
difficulties are fully resolved, the other trading divisions are expected to
produce good results in the second half of the year to 30 June 2004. Beyond
2004, while the businesses are implementing strategies to grow organically,
attention will also be given to seeking out appropriate acquisitions and
business opportunities that meet the criteria determined by the board.
Changes to the Board
It is with regret that we see the retirement from the board of one of our
esteemed non-executive directors, Mr SA Lewis, effective 28 January 2004. The
board of directors thanks Mr Lewis for his valuable contribution in the past.
Accounting Policies
The financial information contained in this announcement for the half year ended
31 December 2003 has been prepared in accordance with South African Statements
of Generally Accepted Accounting Practice. The accounting policies used are
consistent with those used in the financial statements for the year ended 30
June 2003.
Dividend
With the available opportunities to grow organically, pursue potential
acquisitions and reduce interest-bearing borrowings, the directors have decided
not to declare a dividend at this time.
For and on behalf of the Board
C Hall
Acting Chief Executive Officer
Sandton
23 March 2004
Condensed Group Income Statements
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Revenue 201 321 191 022 371 778
Operating profit 10 288 11 892 25 042
Operating profit before
gratuity payment 11 955 11 892 25 042
Gratuity payment to former
executive chairman (1 667) - -
Capital items - profit on disposal
of fixed assets 182 4 92
Capital write off - impairment
of goodwill (493) - (305)
Amortisation of trademarks (53) (54) (106)
Amortisation of goodwill (2 068) (1 757) (4 105)
Net interest expense (1 721) (2 696) (6 402)
Net income before taxation 6 135 7 389 14 216
Taxation (2 815) (2 819) (5 774)
Net income after taxation 3 320 4 570 8 442
Attributable to minority shareholders (71) (89) (162)
Income attributable to
ordinary shareholders 3 249 4 481 8 280
Reconciliation of headline earnings:
Income attributable to ordinary 3 249 4 481 8 280
shareholders adjusted for:
- Amortisation of goodwill 2 068 1 757 4 105
- Capital write off - impairment
of goodwill 493 - 305
- Profit on disposal of fixed assets (182) (4) (92)
- Tax thereon 55 1 28
Headline earnings 5 683 6 235 12 626
Condensed Statement of Changes in Equity
Non-
distri- Compulsory
Ordinary Share butable Retained convertible
share capital premium reserve earnings debentures Total
R000"s R000"s R000"s R000"s R000"s R000"s
Balance at
30 June 2002 1 811 55 050 16 877 31 042 - 104 780
Repurchase
of shares (25) (735) (760)
Compulsory convertible
debentures issued 15 017 15 017
Compulsory convertible
debentures issue expenses(710) (710)
Net profit for the year 8 280 8 280
Balance at
30 June 2003 1 786 53 605 16 877 39 322 15 017 126 607
Net profit for the period 3 249 3 249
Balance at
31 December 2003 1 786 53 605 16 877 42 571 15 017 129 856
Condensed Group Balance Sheets
Unaudited Reviewed Audited
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
ASSETS
Non current assets 101 560 95 717 103 080
Fixed assets 16 571 15 054 16 719
Investments 1 131 247 762
Intangibles 73 472 68 613 75 056
Deferred taxation 10 386 11 803 10 543
Current assets 113 281 133 275 118 991
Bank balances and cash 1 449 6 112 8 811
Other current assets 111 832 127 163 110 180
Total assets 214 841 228 992 222 071
EQUITY AND LIABILITIES
Equity and reserves 130 343 123 397 127 096
Ordinary shareholders" interest 129 856 122 981 126 607
Outside shareholders" interest 487 416 489
Non current liabilities 11 466 11 259 11 477
Long term loans 2 735 2 293 2 511
Compulsory convertible
debenture liability 8 731 8 966 8 966
Current liabilities 73 032 94 336 83 498
Other current liabilities 62 557 82 924 73 356
Bank overdrafts 8 697 - 3 007
Compulsory convertible
debenture liability 1 778 2 017 2 017
Amounts due to vendors - 9 395 5 118
Total equity and liabilities 214 841 228 992 222 071
Condensed Segmental Report
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Revenue 201 321 191 022 371 778
Services 57 982 57 197 126 710
Trading - Distribution 143 339 133 825 245 068
Operating Profit 10 288 11 892 25 042
Services 2 087 4 196 11 934
Trading - Distribution 8 201 7 696 13 108
Condensed Group Cash Flow Statements
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Cash generated/(utilised)
by operations 3 910 (4 425) 20 244
Cash generated/(utilised) by
trading operations 5 577 (4 425) 20 244
Gratuity payment to former
executive chairman (1 667) - -
Net interest paid (2 333) (2 696) (6 402)
Taxation paid (3 951) (2 387) (4 887)
Cash flows from operating activities(2 374) (9 508) 8 955
Cash flows from investing activities (9 463) (14 305) (33 142)
Cash flows from financing activities (1 215) 26 911 26 977
Net (decrease)/increase in cash and
cash equivalents (13 052) 3 098 2 790
Cash and cash equivalents
at beginning of period 5 804 3 014 3 014
Cash and cash equivalents at
end of period (7 248) 6 112 5 804
Statistics
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
"000 "000 "000
Weighted average number of
ordinary shares 178 642 179 992 179 300
Share options - 18 788 -
Compulsory convertible debentures 54 167 3 742 25 377
Fully diluted weighted
average number of shares in issue 232 809 202 522 204 677
Earnings per share (cents) 1,8 2,5 4,6
Headline earnings per share (cents) 3,2 3,5 7,0
Earnings per share before gratuity
payment to former
executive chairman (cents) 2,5 2,5 4,6
Headline earnings per share
before gratuity payment to former
executive chairman (cents) 3,8 3,5 6,9
Fully diluted headline earnings
per share (cents) 2,6 3,3 6,6
Net asset value per share (cents) 72,7 68,9 71,1
Net tangible asset value per
share (cents) 31,6 30,4 29,1
REGISTERED OFFICE:
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:
kim@excellerate.co.za
DIRECTORS:
Christopher Hall (Acting CEO), Harold Bloch, Peter Kramer, Alan Lipchin, Athol
Stewart, Rudi Stumpf*, Clive Howell*, Graham Davel* (*Non-
executive directors)
COMPANY SECRETARY:
ER Goodman Secretarial Services CC (represented by E Goodman). 2nd Floor North
Wing Building, Thrupps Centre, 204 Oxford Road, Illovo 2196. Tel: (+27 11) 268-
0562. Fax: (+27 11) 268-0564
TRANSFER SECRETARIES:
Computershare Limited, 70 Marshall Street, Johannesburg 2001. PO Box 61051,
Marshalltown, 2107. Tel: (+27 11) 370 5000. Fax: (+27 11) 688 7721
SPONSOR:
Nedbank Capital
