| Tue 30 Nov 2004, 8:19 | | Audited results for the year ended 31 August 2004 |
|
Sekunjalo - Audited results for the year ended 31 August 2004
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996 / 006093 /06)
Share Code: SKJ ISIN: ZAE000017893
(`Sekunjalo` or the `company`)
Audited results for the year ended 31 August 2004
Balance sheet
as at 31 August 2004
Group
2004 2003
R000`s R000`s
ASSETS
Non-current assets 131 362 125 247
Investment property - 350
Property, plant and equipment 59 458 61 258
Biological assets 6 485 6 370
Software development costs 1 811 2 160
Goodwill 7 922 8 451
Intangible assets 3 810 4 072
Pharmaceutical dossiers 27 200 28 900
Other investments 7 352 5 872
Investments in associates 919 1 114
Loans receivable 16 405 6 700
Current assets 169 480 142 298
Inventories 52 050 31 859
Trade and other receivables 94 077 74 739
Forward exchange contract asset 1 736 -
Receiver of Revenue 154 -
Cash and cash equivalents 21 463 35 700
TOTAL ASSETS 300 842 267 545
Equity and liabilities
Capital and reserves 107 386 24 633
Share capital 1 557 1 554
Share premium 203 396 126 283
Capital redemption reserve fund 7 975 7 975
Non-distributable reserve 39 39
Hedging reserve 1 736 -
Accumulated loss (107 317) (111 218)
Outside shareholders` interest (2 249) 2 151
Non-current liabilities 75 044 144 289
Interest-bearing borrowings 67 306 139 454
Non-interest-bearing borrowings 815 914
Deferred tax 5 233 2 248
Post employment medical costs 1 690 1 673
Current liabilities 120 661 96 472
Trade and other payables 56 482 45 588
Provisions 11 575 8 436
Current portion of long-term
Borrowings 14 981 13 208
Bank overdraft 33 827 26 308
Receiver of Revenue 3 796 2 932
TOTAL EQUITY AND LIABILITIES 300 842 267 545
Income Statement
for the year ended 31 August 2004
2004 2003
R000`s R000`s
REVENUE 311 690 356 664
Cost of sales 190 367 215 443
GROSS PROFIT 121 323 141 221
Other operating income 27 783 38 625
Gross income 149 106 179 846
Administration, distribution
and selling expenses 125 931 141 837
PROFIT FROM OPERATIONS 23 175 38 009
Finance cost 13 131 24 956
PROFIT BEFORE TAXATION 10 044 13 053
Income taxation expense 4 042 10 521
PROFIT AFTER TAXATION 6 002 2 532
Income from associates 63 80
Outside shareholders` interest 2 164 9 671
NET PROFIT FOR THE YEAR 3 901 12 283
Weighted average number of
shares (000`s) 154 554 93 123
Headline earnings per share (cents) 2.66 16.14
Basic earnings per share (cents) 2.52 13.19
Diluted earnings per share (cents) 2.52 12.93
Reconciliation of basic earnings to headline earnings
R000`s
GROUP
2004
Net profit for the year 3 901
Amortisation of goodwill 529
Profit on disposal of property,
Plant and equipment (439)
Fair value adjustment - investment 124
Headline earnings 4 115
Statement of Changes in Equity
for the year ended 31 August 2004
Non distri- Accum-
Share Share butable Hedging ulated Total
Capital premium reserve reserve CRRF loss
R`000 R`000 R`000 R`000 R`000 R`000 R`000
GROUP
Balance at
31 August 2003 1 554 126 283 39 - 7 975 (111 218) 24 633
Net profit for
the year - - - - - 3 901 3 901
Issue of share capital 3 - - - - - 3
Premium on issue of
share capital - 79 997 - - - - 79 997
Share issue expenses
written off - (2 884) - - - - (2 884)
Revaluation of forward
exchange contracts - - - 1 736 - - 1 736
Balance at
31 August 2004 1 557 203 396 39 1 736 7 975(107 317) 107 386
Cashflow Statement
for the year ended 31 August 2004
2004 2003
R000`s R000`s
Cash flows (to)/from
Operating activities (12 581) 5 069
Cash received from customers 308 405 344 846
Cash paid to suppliers and
Employees (311 777) (308 440)
Cash (utilised by)/generated
from operations (3 372) 36 406
Interest received 4 024 6 172
Finance cost (13 131) (24 956)
Taxation paid (102) (12 553)
Cash flows to investing
Activities (4 706) (7 256)
Acquisition of property,
plant and equipment (7 690) (11 721)
Decrease/(increase) in
biological assets 662 (49)
Acquisition of intangible assets (30) (27)
Additions to investments - (5 529)
Acquisition of goodwill - (4 241)
Proceeds on disposal of property,
plant and equipment 2 002 1 672
Proceeds on disposal of
investment property 350 -
Proceeds on disposal of goodwill - 3 062
Proceeds on disposal of
Intangibles - 6 291
Proceeds on disposal of
investments - 3 286
Cash flows (to)/from financing
Activities (4 469) (4 250)
Capital raised 77 116 -
Redemption of preference
share capital - (7 975)
(Decrease)/increase to
interest-bearing borrowings (65 215) 35 427
(Decrease)/increase in
non-interest-bearing borrowings (100) 465
Amounts paid to outside
Shareholders (6 562) (32 574)
(Increase)/decrease in loans
receivable (9 708) 407
Net (decrease)/increase in
cash and cash equivalents (21 756) (6 437)
Cash and cash equivalents at the
beginning of the year 9 392 15 829
Cash and cash equivalents at the
end of the year (12 364) 9 392
Measurement Bases and Accounting Policies
The financial statements of the company and the group comply with the South
African Statements of Generally Accepted Accounting Practice and are compiled on
the going concern basis. The financial statements are prepared on the historical
cost basis unless otherwise stated. The accounting policies applied are
consistent with those applied in the previous year.
These financial results has been audited by Fisher Hoffman PKF (Newlands)
Incorporated and their audited opinion is available for inspection at
Sekunjalo`s registered office.
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, is considered:
The 50 percent 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 for the fishing and healthcare business units.
The rights offer of R80 million completed in February, resulting in a dilution
of earnings but a strengthening of the balance sheet.
The net effect of the above is that Sekunjalo has a significantly strengthened
balance sheet to ensure growth for the years ahead.
Financial highlights for the year are as follows:
2004 2003
Headline earnings R4.11m R15.03m
for the group
The group achieved R311.6m R356.6m
a turnover of
Operating profit R23m R38m
achieved
Headline earnings
per share (cents) 2.66 16.14
Earnings per
share (cents) 2.52 13.19
Post Balance Sheet Events
Sekunjalo has entered into an agreement with Bensure Management Services (Pty)
Ltd to acquire 70% of Bonben Assurance Limited (Bonlife) and 70% of Benmed
Medical Scheme Administrators (Pty) Ltd (Benmed). Details were described in the
media announcement released on SENS dated 3 November 2004.
During November 2004, final terms were agreed upon to sell Sekunjalo`s
shareholding in New Promex Corporation (Pty) Ltd to Eastland Medical Systems
Limited. The net equity proceeds to all the shareholders of New Promex
Corporation (Pty) Ltd will be R6 000 000 subject to fulfillment of a number of
conditions precedent.
Review of Investments
Premier Fishing South Africa (Pty) Ltd
Premier Fishing remains the only large major black controlled and managed
fishing company in South Africa. Premier Fishing`s empowerment credentials has
positioned it well for the expected allocation of long-term rights in 2005.
PECKS and REDRO continue to dominate the fish paste market and an aggressive
advertising campaign has resulted in significant sales growth over the past
year. Premier brands such as Pecks, Redro and Seagro are currently being
positioned for both the established and emerging market.
The West Coast and deep sea South Coast Lobster business has delivered solid
performance despite a softening of prices in the American market as a
consequence of the declining American economy. The general strengthening of this
resource has resulted in improved catch rates resulting in greater catch cost
efficiencies. The South Coast Lobster is marketed in frozen tail form, which
allows Premier to market the product throughout the year. Premier`s strong South
Atlantic brand is thus synonymous with consistent quality and reliability of
supply.
The squid sector has had good landings in the past year and this sector has thus
made a significant contribution to Premier`s performance.
In the Pelagic sector, pilchard catches have been poor on the West Coast where
Premier traditionally catch most of the pilchards, whilst stronger catches have
been made on the East Coast between Mossel Bay and Port Elizabeth. The entire
industry has thus been forced to transport pilchards from the East Coast to the
canneries, which are all based on the West Coast. This and the combined
oversupply of canned pilchards in the market have resulted in a softening of
prices. However, Anchovy catches have been good and Premier fishmeal production,
using only steam-drying technology, has resulted in higher protein yielding fish
meal which attains premium prices.
Premier Fishing is a significant employer in the West Coast and is at the
forefront of initiatives to provide employees with wellness programmes,
including HIV/Aids counselling and housing programmes. Premier is also a leader
of transformation in the industry.
Premier Fishing`s commitment to the sustainability of the fishing resources has
seen it develop a vigorous code of conduct and an ethics programme for all its
employees. Premier will not tolerate practices, which have been deemed to be
acceptable in the past by the industry, yet, which threaten fishing resources of
our country. Premier Fishing has entered into a social contract with government,
civil society and the employees to create long term sustainability in the
fishing industry and the related communities.
Premier Fishing is well positioned to continue with strong performance and is
currently in the process of increasing its product range through seeking new
ventures in fishing on the African continent. In the past year Premier has
entered into joint ventures to import product into South Africa from Mozambique,
Gambia and India. 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)
SHC remains one of the largest empowerment health care companies in the country
and is committed to job creation and skills development. 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.
The past financial year was a challenging one for Sekunjalo Health Care,
especially in it`s investment in New Promex Corporation (Pty) Ltd, which has to
compete with imports from China and India. SHC is currently finalising a
transaction to sell its remaining equity in NPC, to an international medical
company.
SekPharma (Pty) Ltd
Sekpharma (Pty) Ltd is the pharmaceutical subsidiary of SHC. Its product range
includes well-known dermatological brands such as Dermovate and Betnovate,
asthma medication such as Becotide, Becloforte and Volmax, as well as anti-
microbial such as Fortum.
SekPharma has a committed management team with extensive industry experience.
SekPharma continues to build on its relationship with multi-national
pharmaceutical companies. The acquisition of 17 pharmaceutical dossiers from
Glaxo Smith Kline has given the SekPharma a solid base from which to grow its
pharmaceutical business. The increased focus of SHC on pharmaceuticals is part
of an aggressive expansion strategy, aimed at SekPharma becoming a significant
company in the pharmaceutical market over time.
With the focus on growing the pharmaceutical operations, SekPharma is building
on its relationship with the major industry groups while developing its own
niche strategic marketing advantages. The base infrastructure has been
successfully bedded down and exploiting new marketing opportunities will deliver
the necessary returns. Sekpharma is thus poised to become a significant
pharmaceutical company in the market place.
Rapimed Diagnostics
Rapimed, with its branded product Uricheck is one of the few truly African rapid
diagnostic-manufacturing companies. Rapimed products include urine diagnostic
strips, pregnancy diagnostic strips as well as HIV/Aids rapid diagnostic kits.
Rapimed is at the forefront of rapid diagnostic technology. It has been able to
successfully replicate its success in the manufacturing of the urine diagnostic
strips with the innovative development of the pool strips for testing the pH and
chlorine of pools.
Rapimed has received ISO 9002 accreditation. This accreditation will allow it to
significantly increase its exports into the European market and build on its
current export base into South America and the Middle East. Rapimed is currently
assessing a number of initiatives to increase its penetration into the private
sector.
Health System Technologies (Pty) Ltd (HST)
Health System Technologies continues to impress with its successful rollout of
the health information systems 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.
Health System Technologies is able to provide the government with the health
information systems to better manage hospitals, which assists in the quality of
health care delivery in the Province. The successful implementation of the
project in the Cape Province augurs well for the future prospects of this
entity.
Sekunjalo Medical Trading
Sekunjalo Medical Trading is currently involved in joint ventures to extend the
trading capability of Sekunjalo into the public sector. These joint ventures are
with multinationals that have a significant product range that can be used in
the public sector. Sekunjalo`s network within the public sector ensures that
this partnership between multinationals and Sekunjalo is of mutual and
beneficial interest to both parties.
Corporate Social Investment
Sekunjalo has an extensive corporate social investment programme which is
integrated with its business practices. Sekunjalo`s corporate social investment
programme has as a strategy, the development of human capital through the arts
education and sports. Its programme includes the support and development of
black musicians, the hosting of the Sekunjalo Jazz Concert, and support for
primary and high school students from the poorest communities and the support
for students wanting to study in the health sciences through the MTM Bursary
Trust. Furthermore, Sekunjalo has recently assisted initiatives to uplift poor
black urban areas in the Cape region. Recently Sekunjalo has partnered a Bank,
the Province and the City of Cape Town in the development of The Business Place
Cape Town to assist emerging entrepreneurs. Sekunjalo`s own employees have
benefited through an extensive skills development, wellness and employment
equity programme. The group has an aggressive procurement policy, which supports
emerging black businesses.
Prospects
Sekunjalo`s prospects are positive since it has pioneered a business model,
which is profitable and sustainable.
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.
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-retroviral for 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.
Premier Fishing being the most empowered large fishing company, with its
sustainable fishing quotas and branded products is expected to continue to
generate a strong export market for its products.
The R80 million rights offer along with a significant strengthening of the
balance sheet has created a solid platform for organic and acquisitive growth.
Sekunjalo is therefore well placed to deliver a solid performance in the year
ahead. Sekunjalo and its advisers have issued summons on Deloitte & Touche
Tomahatsu 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.
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 are highly appreciated. Dr Iqbal Surve, Sekunjalo`s
Chief Executive Officer extends his appreciation to the Chairman, his fellow
directors of Sekunjalo, and the management and employees for their unrelenting
commitment, dedication, enthusiasm and excellence, for without their
contribution the success of the company in the past year would not have been
possible.
By order of the Board
Directorate
Dr WA Mgoqi (Chairman),
Dr MI Surve (Chief Executive Officer),
MY Kajee
MH Ally (Financial Director),
AJ Snyders
KC Patel
Z Kota
D Case
PR Phillips (Company Secretary)
Registered Address: 2nd floor, Great Westerford, 240 Main Road, Rondebosch,
7700, Tel: +27 21 658 2700, Fax: +27 21 658 2714 (PO Box 2679, Clareinch, 7740)
Transfer Secretaries:
Ultra Registrars (Pty) Ltd
11 Diagonal Street Johannesburg, 2001
Cape Town
30 November 2004
Sponsor
Nedbank Capital
Date: 30/11/2004 07:29:20 AM
Produced by the JSE SENS Department
