| Tue 11 Apr 2006, 8:21 | | Sekunjalo Investments Limited - Unaudited interim |
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SKJ
SKJ
Sekunjalo Investments Limited - Unaudited interim results for the period
ended 28 February 2006
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share Code: SKJ ISIN: ZAE000017893
("Sekunjalo")
SEKUNJALO UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 28 FEBRUARY 2006
GROUP BALANCE SHEET
Restated Restated
Unaudited 6 Unaudited 6 Unaudited
months months
Group Group Group
to 28 to 28 to 31
February February August 2005
2006 2005
R"000 R"000 R"000
ASSETS
Non current assets 378,952 272,229 347,670
Property, plant & equipment 185,047 188,014 183,953
Goodwill 35,330 14,666 26,138
Other intangible assets 6,781 5,311 6,247
Pharmaceutical dossiers 24,650 26,350 25,500
Biological assets 10,627 6,485 9,725
Investments (incl. Associate co"s) 46,978 10,700 34,615
Loans receivable 48,433 18,539 41,475
Deferred taxation 21,106 2,164 20,017
Current Assets 139,934 147,297 218,106
Inventories 37,817 48,931 34,900
Trade & other receivables 85,485 73,786 95,244
Receiver of revenue 313 154 155
Bank & cash on hand 16,319 24,426 87,807
TOTAL ASSETS 518,886 419,526 565,776
EQUITY & LIABILITIES
Capital & Reserves
Issued capital 266,280 213,943 236,426
Other reserves 8,078 3,829 8,246
(Accumulated loss)/retained income (22,048) (57,352) (12,241)
252,310 160,420 232,431
Minority shareholders interest 39,199 30,559 40,711
Total equity 291,509 190,979 273,142
Non Current Liabilities
Interest bearing borrowings 49,097 60,753 65,828
Non interest bearing borrowings 1,729 465 4,831
Policyholder liabilities 11,827 - 11,729
Post employment medical costs 1,827 1,690 1,789
Deferred taxation 41,582 37,523 53,482
Current Liabilities 121,315 128,116 154,975
Trade & other payables 91,577 80,787 102,624
Bank Overdraft 24,660 43,317 47,218
Receiver of revenue 5,078 4,012 5,133
TOTAL EQUITY & LIABILITIES 518,886 419,526 565,776
Total number of shares in issue 313,417,099 257,673,667 283,840,183
Net Asset Value (Cents) 80.50 62.26 81.89
GROUP INCOME STATEMENT
Restated Restated
Unaudited 6 Unaudited 6 Unaudited
months months
Group Group Group
to 28 To 28 to 31 August
February 2006 February 2005 2005
R"000 R"000 R"000
Revenue 175,010 161,278 399,830
Operating (Loss)/profit (16,701) (20,135) 47,962
Finance (Cost)/income (2,372) (5,004) (14,497)
(Loss)/profit before tax (19,073) (25,139) 33,465
Taxation gain/(expense) 5,875 7,364 8,180
(Loss)/profit after tax (13,198) (17,775) 41,645
Income from associates 1,878 - 1,088
(Loss)/profit for the period (11,320) (17,775) 42,733
Attributable to:
Equity holders of the parent
company (9,808) (14,450) 34,429
Minority shareholders interest 1,512 3,325 (8,305)
(11,320) (17,775) 42,733
Reconciliation of Basic earnings
to Headline Earnings
Attributable (Loss)/Income (9,808) (14,450) 34,429
Profit on disposal of property,
plant & equipment - - (5)
Profit on sale of trademarks - - (23,502)
Unexercised empowerment offer - - (1,310)
Headline earnings (9,808) (14,450) 9,612
Weighted average number of
shares in issue 296,420,653 232,950,731 255,120,169
Headline (Loss)/earnings per
share (cents) (3.31) (6.20) 3.77
(Loss)/earnings per share 13.50
(cents) (3.31) (6.20)
Diluted (Loss)/earnings per
share (cents) (3.29) (6.10) 13.50
NOTE:
1. The calculation of EPS is based on a loss of R9,808,000 (2005: -
R14,450,000) and a weighted number of 296,420,653 (2005: 232,951,731)
ordinary shares in issue throughout the year.
2. The calculation of headline earnings per share is based on a headline
loss of R9,808,000 (2005: -R14,450,000) and a weighted number of
296,420,653 (2005: 232,951,731) ordinary shares in issue throughout the
year.
3. The calculation of diluted earnings per share is based on a loss of
-R9,808,000 ( 2004: -R14,450,000) and a diluted number of 298,336,028
(2005: 236,781,481) ordinary shares in issue, assuming all the share
options in existence at balance sheet date were issued.
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 28 FEBRUARY 2006
Share Share Other CRRF Accumulat Total Minorit Total
capital premium reserv ed loss y Equity
es Shareho
lders
R"000 R"000 R"000 R"000 R"000 R"000 R"000 R"000
Balance 1,557 203,396 1775 7,975 (117,726) 96,977 6,876 103,853
at 31
August
2004
IFRS
Adjustme
nts to
opening
balance - - - - 72,256 72,256 25,530 97,786
Balance
at 31
August
2004 1,557 203,396 1,775 7,975 (45,470) 169,233 32,406 201,639
Restated
Net
profit
from
ordinary - - - - 37,473 37,473 9,073 46,546
activiti
es
IFRS
adjustme
nts for
the - - - - (3,044) (3,044) (768) (3,812)
period
Issue of
share
capital 1 33,616 - - - 33,617 - 33,617
Treasury
shares
held
within
the - (483) - - - (483) - (483)
group
Share
issue
expenses - (127) - - - (127) - (127)
written
off
Empowerm
ent
option (1,532) - - - - (1,532) - (1,532)
expired
Foreign
currency
translat
ion - - 25 - - 25 - 25
reserve
Dividend
paid - - - - (1,200) (1,200) - (1,200)
Revaluat
ion of
forward
exchange
contract - - (1,530 - - (1,530) - (1,530)
s )
Balance
at 31
August 26 236,402 270 7,975 (12,241) 232,432 40,711 273,142
2005
Net
profit
from (9,807)
ordinary - - - - (9,807) (1,512) (11,319)
activiti
es
Issue of
share
capital - 29,852 - - - 29,852 - 29,852
Foreign
currency
translat
ion - - 7 - - 7 - 7
reserve
Revaluat
ion of
forward
exchange
contract - - (174) - - (174) - (174)
s
Balance
at 28
February
2006 26 266,254 103 7,975 (22,048) 252,310 39,199 291,508
ABRIDGED CASH FLOW STATEMENT FOR THE PERIOD ENDED 28 FEBRUARY 2006
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months
to 28 February to 28 to 31 August
2006 February 2005 2005
R"000 R"000 R"000
CASH FLOWS FROM OPERATING
ACTIVITIES (13,757) (15,852) 29,538
CASH UTILISED BY INVESTING
ACTIVITIES (30,799) (1,588) (2,733)
CASH FLOWS FROM FINANCING
ACTIVITIES (4,374) 10,913 23,795
Net decrease in cash and
cash equivalents (48,930) (6,527) 50,600
Cash and cash equivalents at
beginning of period 40,589 (12,364) (10,011)
Cash and cash equivalents at
end of period (8,341) (18,891) 40,589
OVERVIEW
CORPORATE PROFILE
Sekunjalo Investments limited ("SIL") is a Black-controlled Investment
Holding Company domiciled in the Republic of South Africa with global
operations in London and Mauritius. SIL is listed on the JSE Limited
("JSE"). Sekunjalo Group ("Sekunjalo") can be considered as Technology and
Innovations Driven Investments which include the following sectors:
Healthcare and Pharmaceuticals, Aquaculture, Information Technology and
Telecommunications, and Financial Services.
RECENT HIGHLIGHTS
A recent highlight for the group is the announcement of being awarded 3 top
Awards by the Financial Mail/Empowerdex.
South Africa"s Most Empowered Company
Top Performing Company in Terms of Enterprise Development
Top Empowerment Company in its Sector
ACCOUNTING POLICIES AND IFRS
In line with the listing requirements of the JSE Securities Exchange of
South Africa the Sekunjalo Investments Group is adopting International
Financial Reporting Standards (IFRS) with effect from 1 September 2004.
Consequently the first IFRS results are the interim results for the six
months ended 28 February 2006. Sekunjalo"s first complete set of financial
statements under IFRS will be for the year ending 31 August 2006. As the
group publishes comparative information for one year in its financial
statements, the date for transition to IFRS is effectively 1 September
2004, which represents the start of the earliest period of comparative
information presented.
South African accounting standards have seen a number of significant
changes over the past couple of years as they were being aligned with IFRS.
The most notable change was the adoption of the South African version of
IAS 16 (AC 123 - Property, plant and equipment).
BASIS OF PRESENTATION
The financial information has been prepared in accordance with IFRS
statements that are currently effective together with expected amendments.
This may differ from IFRS finally in effect at 31 August 2006 as a result
of ongoing review and possible amendment by interpretive guidance from the
International Accounting Standards Board (IASB) and the International
Financial Reporting Interpretations Committee (IFRIC) and may therefore be
subject to change.
FIRST TIME ADOPTION OF IFRS
The key principle of IFRS 1- First-time adoption of International Financial
Reporting Standards is full retrospective application of IFRS. This
statement however provides exemptions from retrospective application in
certain instances due to cost and practical considerations.
Adjustments as a result of the adoption of IFRS
The significant impact of changing from SA GAAP to IFRS is summarised
below.
IAS 16 - REVALUATION OF RESIDUAL VALUES IN PROPERTY, PLANT AND EQUIPMENT
In calculating depreciation charge an entity reduces the depreciable amount
of an asset by its residual value. Previously under SA GAAP, the estimated
residual value was fixed on recognition of the asset and was not subject to
reassessment. IAS 16 revised requires that the residual value of the assets
should be reassessed at each balance sheet date. Annual increases in asset
values result in annual upward adjustments of residual values. The
continuous reassessment of residual values typically leads to a reduction
in depreciation charges and depreciation charges cease when the carrying
value of an asset equals the residual value.
REVALUATION OF PROPERTY, PLANT AND EQUIPMENT
A first time adopter may elect to use the fair value of individual property
and equipment at transition date as the deemed cost. The group has elected
to measure individual items of property, plant and equipment at fair value
on 1 September 2003. In future those fair values are deemed to be cost at
that date.
Where significant components of an item of property, plant and equipment
have different useful lives or residual values those components are
accounted for as separate items of property, plant and equipment.
Previously all parts of an item of property, plant and equipment were
depreciated at the same rate.
IAS 12/IAS 40 - DEFERRED TAX APPLICABLE TO FAIR VALUE ADJUSTMENTS ON
PROPERTY, PLANT AND EQUIPMENT
IAS 12 - Income Taxes defines the difference between the carrying amount of
a revalued depreciable asset and its tax base as a temporary difference and
therefore gives rise to a deferred tax liability or asset. The deferred tax
liability was increased as a result of the fair value adjustments made to
property, plant and equipment.
Reconciliation of significant balance IFRS adjustments
Restated Restated
Unaudited Unaudited
IFRS ADJUSTMENTS to 28 to 31 August
February 2005 2005
R"000 R"000
PROPERTY,PLANT AND EQUIPMENT
Opening balance 60,542
61,748
IAS16 - fair valuation 128,798 128,798
IAS16 - additional (2,532) (5,386)
depreciation
Closing balance 188,014 183,954
DEFERRED TAX LIABILITY
Opening balance (2,213) (3,599)
IAS16 - deferred tax relating
to fair valuation 38,639 38,639
IAS16 - deferred tax relating
to additional depreciation 1,067 (1,579)
Closing balance 35,359 33,466
EQUITY
Opening restated balance 97,843 163,219
IAS16 - fair valuation 72,256 72,256
IAS16 - additional (1,849) (3,044)
depreciation
Closing balance 168,250 232,431
Profit/(loss) for the period
Opening balance (12,631) 37,473
IAS16 - additional (1,819) (3,044)
depreciation
Closing balance (14,450) 34,429
FURTHER DEVELOPMENTS IN IFRS REPORTING
The information has been prepared on the basis of the group"s expectation
of the standards that will be applicable as at 31 August 2006. IFRS
information at year-end may differ from the information contained herein as
different practices may develop with regard to interpretation and
application of the standards.
COMMENTARY ON RESULTS
The Sekunjalo Investments Limited results for the first six months of the
financial year are in line with expectations and display significant
improvements when compared to the same period of the previous financial
year.
All operating divisions, apart from healthcare, performed to budget and are
on track to achieve the year end projections.
Profits in fishing continue to be affected by the continued strengthening
of the rand, restructuring costs and the pelagic season which again got off
to a late start due to the delay in the long term fishing rights process
and environmental factors.
As in the past, the interim results were again impacted upon by the
inherent cyclical nature associated with both the healthcare and the
fishing industries, resulting in an operating loss.
This "seasonal operating loss" is significantly lower than the previous
comparative period.
Notwithstanding the above, the past six months results do not necessarily
indicate the expected full year earnings. Sekunjalo expects earnings for
the year ending 31 August 2006 will be significantly improved compared to
that of the prior comparative period. This expected improved performance
for the 2006 financial year will be as a result of a focus on organic
growth, income of newly acquired businesses as well as the upside of the
fishing and healthcare industries that comes through in the second six
months of the financial year.
REVIEW OF INVESTMENTS
PREMIER FISHING SA
Premier Fishing has been reasonably successful in being allocated Long Term
Rights but along with competitors are now involved in the Long Term Fishing
Rights Appeal Process.
Premier"s continued strong presence in the market enables it to make
significant contributions to Seklunjalo"s turnover. In the second half of
the year, Premier is expecting to land its full quota. Prices have firmed
and should remain at current levels due to a shortage of fish. In addition
to the above, management are involved in a process of enhancing performance
via centralisation and improvement in operational efficiencies in all
business units.
SEKUNJALO HEALTH CARE
Sekunjalo Health Care consisting of independent autonomous business units,
Rapimed, Sekpharma, and Health System Technologies.
Performance in this division has not been in line with the rest of the
group.
Profitability continues to be good at Health Systems technologies but the
same can not be said in terms of the other 3 entities, namely, Rapimed,
Sekpharma.
To remedy this, the executives in the division are improving productivity
and efficiencies to enhance profitability. This has unfortunately included
retrenchments and improved results will flow through in the next 6 months.
SEKPHARMA
Sekpharma continues to market branded generic products such as Betnovate,
Dermovate, asthma medication such as Becotide, Becloforte and Volmax, as
well as anti-microbial such as Fortum. The company has entered into a
number of joint ventures with multinationals and is seeking to add to its
product portfolio through acquisitions in the next 18 to 24 months.
A more focused and productive sales effort will see vastly improved results
in the second half of this financial year.
RAPIMED
Rapimed continues to focus on the public sector to supply Rapid Urine
Diagnostics to the government. Through the implementation of various
strategies, including the launching of HIV and Pregnancy tests so as to
decrease reliance on existing products, the creation of operational synergy
and integration of Sekunjalo"s group resources and actively pursuing ISO
2001 certification for exporting purposes, it is well underway to deliver
in the local and international markets.
HEALTH SYSTEM TECHNOLOGIES (HST)
The successful provision of hospital information systems to the tertiary
hospitals such as Groote Schuur Hospital, Tygerberg and Red Cross
Children"s Hospital has contributed significantly to the underlying value
of HST and the company is now a major role player in the health care
industry. Continued successful rollouts will ensure a relatively easy
transition for private application.
SEKUNJALO INFORMATICS AND TELECOMMUNICATION
SYNERGY COMPUTING
Synergy, a Software solutions company in the Business Intelligence ("BI")
solutions and Corporate Performance Management environment provides fast
and easy access to critical corporate data to an existing customer base of
350 active "Blue Chip" corporate and government clients. Regarded as
leaders in their field and with offices in Johannesburg, Cape Town and
Durban, Synergy serves the needs of customers across Africa and into over
50 countries across the globe.
Synergy"s BI solutions are considered a critical element in Sekunjalo"s
strategic focus on providing products and services that are affordable,
socially relevant and aligned with the strategic thrust of government
policy. Sekunjalo is in a unique position to participate as a partner in
the government proposed state health insurance fund.
FIOS
FIOS is a Niche company focussed on the deployment and support of financial
performance management (FPM) systems
Utilising the systems of Cognos, (World leader in business intelligence
software) FIOS provides services and solutions that allow organisations to
dramatically improve business processes and to strengthen internal controls
The company was established in 2002, and is already a leader in its space
and now a major player in SA FPM market
SEKUNJALO CAPITAL
Sekunjalo Capital is the holding company of the Sekunjalo Financial
Services Division.
During the last 2 years Sekunjalo has been acquiring financial services
companies and collectively now has the capability to provide a broad range
of financial services and products.
Companies acquired to date are:-
Sekunjalo Life Assurance
Sekunjalo Medical Aid Administrators
Sekunjalo Asset Finance
Sekunjalo Credit Finance
First Light Pension Fund Administrators
Imagination
Sharenet
Cynthesys
African Investment and Risk Group
Bella Asset Management
Bella Investment Services
Riverstone Alternative Solutions
Sekunjalo Structured Finance
The Financial Services Group now has offices in Cape Town, Johannesburg,
Mauritius and is adding significantly to the groups profits.
Collectively the financial services group services approximately 300 000
clients who present significant opportunity for cross-selling and migration
of services.
DIVIDENDS
No dividends have been declared for the current period and it is not the
intention that any dividends will be declared or paid in the foreseeable
future. The directors believe Sekunjalo is poised to deliver significant
returns on investment, and they believe the capital in the company is best
deployed internally.
APPOINTMENTS
13 December 2005 saw the announcement of the appointment of Mr Norman
Noland as the Deputy CEO of SIL.
Appointments to the board of SIL included Messrs N Noland and S Young,
whilst Ms MJ Ramatlhodi, previously a non-executive, has taken up an
executive position with the group.
PROSPECTS
Sekunjalo is confident in its ability to show steady growth in NAV and
profitability.
This is underscored by the fact that operating profits in a number of the
new operations are already showing encouraging growth. Although half-year
results are still depressed by the seasonality of our fishing business the
company is pleased to say that overall results show a significantly
improved performance over the same period historically.
Our positive forecast to year-end shows a significant improvement on last
year and reflects on commitment to unlocking shareholder value. This drive
to unlock value is based on a clearly defined acquisition strategy coupled
to focused attention on organic growth, all of which is underscored by a
value based management system that targets operating profit.
Sekunjalo"s strengthened balance sheet and transformative empowerment
business model has now entered its growth and acquisition phase. The
company"s sustainable, broad based and genuine empowerment approach to its
business will ensure that it is well positioned to become one of the jewels
on the JSE.
By order of the Board
Dr WA Mgoqi Dr MI Surve
Chairman Chief Executive
Cape Town,
11 April 2006
Directors: Dr MI Surve (Chief Executive Officer), Dr. WA Mgoqi
(Chairperson),
N Noland (Deputy CEO), H Ally, K. Patel, Dr G Mayende, M Nkosi, M.J.
Ramatlhodi, D Case, Z Kota, S Young
MG January (Company Secretary)
Registered Address: Transfer Secretaries:
Sekunjalo House Ultra Registrars (Pty) Ltd
Block F, The Terraces 11 Diagonal Street
Steenberg Office Park Johannesburg 2001
Tokai 7945
Sponsor: Nedbank Capital
Date: 11/04/2006 08:22:09 AM Produced by the JSE SENS Department
