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EXL EXLD
EXL
EXL - Excellerate - Unaudited Results for the six months ended 31 December 2006
EXCELLERATE HOLDINGS LIMITED
Registration number 1997/009884/06
JSE code: EXL
ISIN: ZAE000026092
EXLD ISIN: ZAE000044145
(Incorporated in the Republic of South Africa)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
FINANCIAL OVERVIEW
Results for the six-month period to 31 December 2006 were much improved over the
last six months as well as the comparative period. This was primarily due
to resolution of the historic problems within the food trading businesses
combined with solid performances at all other business units. The overall
result however was impacted by the costs of implementing the BEE
transaction with Akenton as well as costs associated with reducing the
centralised management structure.
Revenue for the six months ended 31 December 2006 decreased by R16,5 million
from R289,2 to R272,7 million mainly due to the downsizing of operations at
the Food Trading division. Revenue in the Food Trading Division decreased
by R41,6 million as a result of the elimination of unprofitable trading
lines. Net profit attributable to shareholders however showed a pleasing
increase to R11,1 million for the six months, representing an increase of
19,9% over the comparative period. Headline earnings increased by 53,5%
over the comparative period.
Fully diluted earnings per share increased by 19% to 5,0 cents per share, whilst
fully diluted headline earnings per share increased by 54,5% to 5,1 cents
per share.
Cash flows generated by operations amounted to R19,2 million before taking into
account R29,2 million utilised to expand the working capital requirement.
Cash flows utilised in investing activities amounted to R3,8 million of
which the majority were used for the acquisition of property, plant and
equipment. The overall effect of these items along with R7,8 million
generated by financing activities and tax and interest payments of R3,0
million and R3,2 million respectively, was a decrease in cash and cash
equivalents amounting to R12,2 million since 30 June 2006. It is expected
that cash generation will be stronger in the second half.
OPERATIONAL OVERVIEW
Trading-Distribution
The revenue in the Trading-Distribution segment of the business decreased by
R22,8 million to R207,6 million mainly due to re-structuring of the Food
Trading Division. Operating profit increased by 82,6% to R16,0 million as a
result of solid trading performances at Goldenmarc and Foodserv coupled
with a return to profitable trading in the Food Trading division.
Foodserv enjoyed strong demand for its products on the back of industry growth
and new initiatives, whilst Goldenmarc also achieved good sales growth on
strong demand from the retailers.
The Food Trading division achieved modest operating profits but still incurred
some costs on winding up historically non-profitable areas. The business
unit is expected to continue to trade profitably in the next six months.
Services
Revenue in the Services segment of the business increased by R6,3 million to
R65,1 million. Operating profits however were relatively flat at R10,2
million. This was due mainly to non-recurring operational issues relating
to a specific contract at Interpark which was offset by a stronger
performance at Sterikleen on the back of strong cost management.
Levingers has achieved good revenue growth for the period with similarly
improved results.
EMPOWERMENT
On 18 December 2006, a general meeting of shareholders approved the agreements
with Akenton Services (Pty) Ltd as a BEE partner to take up a 25%
shareholding in the operating subsidiaries of the group. The board is of
the view that Akenton will add significant value, not only as a BEE partner
but also for their innovative and dynamic outlook on business. All
conditions precedent to the agreements have been fulfilled and the
agreements have been fully implemented.
The group`s 49% investment in the Katanga group of companies continues to yield
good results. Several new contracts have been secured in the Services
segment. The group continues to enjoy strong relations with its empowerment
partner, Ikamva Labantu.
PROSPECTS
The Group has completed a re-structuring exercise and now operates the business
units on a more de-centralised basis. This is expected to deliver some
financial benefits within the Group head office as well as at the business
units themselves. In addition, a culture of strong growth and cash
generation has been set, and this is expected to have an impact in the
coming period. The expected positive cash flow will enable the Group to
finance acquisitions.
Trading-Distribution
Goldenmarc will continue to grow organically, and expects to consolidate some of
the smaller operators in the industry, whilst Foodserv expects to achieve
growth through improved capacity coupled with focus on a broader section of
the market. The Food Trading Division is expected to grow off a low base.
Services
Both Sterikleen and Interpark expect to grow through aggressively pursuing new
contracts as well as through acquisitions within their sectors of the
industry. Levingers is expected to achieve growth through the roll out of
further outlets.
ACCOUNTING POLICIES
The condensed interim financial statements for the six months ended 31 December
2006 has been prepared in accordance with International Financial Reporting
Standards ("IFRS") applying IAS34: Interim Financial Reporting. The
accounting policies used to prepare the interim results are consistent with
those applied in the previous period, except for a reclassification between
sales and cost of sales for the six months to December 2005 to give effect
to the full adoption of IFRS. There was no effect on the profit line.
CHANGES TO THE BOARD
Chris Hall resigned as Chief Executive Officer of the group effective 31
December 2006. The board of directors thanks Chris Hall for his
contribution to the Group.
Gordon Hulley who joined the group as Chief Operating Officer in February 2006
accepted the appointment to Chief Executive Officer of the Group with
effect from 1 January 2007.
DIVIDEND
As the group pursues opportunities to grow by acquisition and reduce interest-
bearing borrowings, the directors have decided not to declare a dividend at
this time.
For and on behalf of the Board
Gordon Hulley
Chief Executive Officer
Sandton
28 February 2007
Condensed group income statement
Restated
Unaudited unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Revenue 272 704 289 209 508 714
Gross profit 83 267 84 213 148 107
Operating profit 16 237 12 596 11 070
Gain on disposal of - - 1 245
subsidiary
Fair value adjustment on - (173) (173)
loan accounts
Share of undistributed 1 512 2 042 4 316
profits of associates
Impairment of goodwill - - (150)
Profit before finance 17 749 14 465 16 308
charges and taxation
Net finance costs (2 015) (1 972) (4 095)
Profit before taxation 15 734 12 493 12 213
Taxation (4 486) (3 168) (2 963)
Profit after taxation 11 248 9 325 9 250
Attributable to:
Equity holders of the parent 11 114 9 270 9 147
Minority interest 134 55 103
11 248 9 325 9 250
Shares in issue (000`s) 176 465 173 595 174 095
Weighted average number of 174 412 173 485 173 564
shares in issue (000`s)
Fully diluted weighted 224 925 225 795 224 990
average number of shares in
issue (000`s)
Earnings per share (cents) 6,4 5,3 5,3
Fully diluted basic earnings 5,0 4,2 4,2
per share (cents)
Reconciliation between
income attributable to the
equity holders of the parent
and the headline earnings
attributable to the equity
holders of the parent:
Income attributable to 11 114 9 270 9 147
equity holders of the parent
adjusted for:
- Impairment of goodwill - - 323
and fair value adjustment on
loan account
- Loss/(profit) on 12 (2 358) (269)
disposal of property, plant
and equipment and investment
in subsidiaries
- Tax thereon (3) 335 (326)
Headline earnings 11 123 7 247 8 875
Headline earnings per share 6,4 4,2 5,1
(cents)
Fully diluted headline 5,1 3,3 4,1
earnings per share (cents)
Condensed group balance sheet
Restated
Unaudited unaudited Audited
31 December 31 December 30 June
2006 2005 2006
R`000 R`000 R`000
ASSETS
Non current assets 102 593 96 511 100 178
Property, plant and 25 123 28 917 24 664
equipment
Investments in associates 1 304 942 2 466
Intangible assets 54 956 52 952 54 898
Other financial assets 548 760 681
Deferred taxation assets 20 662 12 940 17 469
Current assets 219 580 193 644 179 260
Bank balances and cash 3 759 12 075 2 515
Other current assets 215 821 181 569 176 745
Total assets 322 173 290 155 279 438
EQUITY AND LIABILITIES
Equity and reserves 155 438 143 630 143 402
Equity attributable to 154 536 142 910 142 634
equity holders of the parent
Minority shareholders` 902 720 768
interest
Non current liabilities 10 939 8 413 6 269
Long term loans 9 539 5 980 5 268
Deferred taxation 1 400 1 110 1 001
liabilities
Compulsory convertible - 1 323 -
debenture liability
Current liabilities 155 796 138 112 129 767
Other current liabilities 133 196 106 006 119 571
Bank overdrafts 21 166 29 705 7 734
Compulsory convertible 1 434 2 401 2 462
debenture liability
Total equity and liabilities 322 173 290 155 279 438
Condensed statement of changes in equity
Ordinary Compulsory Non-
share Share convertible distributable
capital premium debentures reserve
R000`s R000`s R000`s R000`s
Balance at 30 June 1 731 49 752 18 641 18 787
2005
Disposal of 5 236
treasury shares
Share based 195
payment
transactions
Profit for the
period
Balance at 31 1 736 49 988 18 641 18 982
December 2005
Balance at 30 June 1 741 50 224 18 641 18 952
2006
Share based (356)
payment
transactions
Sale of treasury 24 1 120
shares
Profit for the
period
Balance at 31 1 765 51 344 18 641 18 596
December 2006
Attributable
to
Retained equity holders Minority
earnings of parent interest Total
R000`s R000`s R000`s R000`s
Balance at 30 June 44 293 133 204 665 133 869
2005
Disposal of 241 241
treasury shares
Share based 195 195
payment
transactions
Profit for the 9 270 9 270 55 9 325
period
Balance at 31 53 563 142 910 720 143 630
December 2005
Balance at 30 June 53 076 142 634 768 143 402
2006
Share based (356) (356)
payment
transactions
Sale of treasury 1 144 1 144
shares
Profit for the 11 114 11 114 134 11 248
period
Balance at 31 64 190 154 536 902 155 438
December 2006
Condensed group cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Cash flows from operating (16 161) (2 856) 9 281
activities
Cash (utilised)/generated (9 958) 2 787 22 167
by operations
Net finance costs (3 202) (1 484) (6 308)
Taxation paid (3 001) (4 159) (6 578)
Cash flows from investing (3 804) (6 996) (8 177)
activities
Cash flows from financing 7 777 999 2 454
activities
Net (decrease)/increase in (12 188) (8 853) 3 558
cash and cash equivalents
Cash and cash equivalents at (5 219) (8 777) (8 777)
beginning of period
Cash and cash equivalents at (17 407) (17 630) (5 219)
end of period
Statistics
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2006 2005 2006
000`s 000`s 000`s
Ordinary shares in issue 176 465 173 595 174 095
Weighted average number of 174 412 173 485 173 564
ordinary shares
Share options 3 240 5 037 4 154
Compulsory convertible 47 273 47 273 47 273
debentures
Fully diluted weighted 224 925 225 795 224 990
average number of shares in
issue
Earnings per share (cents) 6,4 5,3 5,3
Fully diluted basic earnings 5,0 4,2 4,2
per share (cents)
Headline earnings per share 6,4 4,2 5,1
(cents)
Fully diluted headline 5,1 3,3 4,1
earnings per share (cents)
Net asset value per share 87,6 82,3 81,9
(cents)
Net tangible asset value per 56,4 51,8 50,4
share (cents)
Condensed segmental report
Restated
Unaudited unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Revenue 272 704 289 209 508 714
Trading - Distribution 207 594 230 412 386 747
Services 65 110 58 797 121 967
Operating profit 16 237 12 596 11 070
Trading - Distribution 16 031 8 781 (3 799)
Services 10 159 10 131 25 467
Corporate (9 953) (6 316) (10 598)
Profit before interest and 17 749 14 465 16 308
taxation
Trading - Distribution 16 043 8 662 (4 123)
Services 11 659 10 124 29 783
Corporate (9 953) (4 321) (9 352)
REGISTERED OFFICE:
1st Floor, Atholl Square, Cnr Katherine Street and Wierda Road East, Sandown,
2196. PO Box 785448, Sandton 2146. Tel: (+27 11) 523 2980. Fax: (+27 11)
523 2990. E-mail: info@excellerate.co.za
DIRECTORS:
Gordon Hulley (Chief executive officer), Harold Bloch, Peter Kramer, Alan
Lipchin, Athol Stewart, Rob Owens, Rudi Stumpf*, Clive Howell*+, Graham
Davel*, Michael Mohohlo*
(* Non-executive directors)(+ Alternate to Graham Davel)
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 Investor Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg
2001. PO Box 61051, Marshalltown, 2107.
Tel: (+27 11) 370 5000. Fax: (+27 11) 688 7721
Date: 02/03/2007 16:00:00 Produced by the JSE SENS Department.
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