SKJ
SKJ
SKJ - Sekunjalo - Audited group results for year ended 31 August 2008 and
withdrawal of cautionary announcement
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: SKJ and ISIN: ZAE000017893
("Sekunjalo")
AUDITED GROUP RESULTS FOR YEAR ENDED 31 AUGUST 2008 AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
GROUP BALANCE SHEET
Audited Audited
Group to Group to
31 August 31 August
2008 2007
R`000 R`000
Assets
Non-Current Assets 575 910 721 010
Biological assets-abalone 33 582 17 882
Property, plant and equipment 195 535 201 374
Goodwill 97 148 85 885
Intangible assets 54 915 40 181
Investments in associates 150 000 -
Other financial assets 9 565 361 081
Deferred tax 35 165 14 607
Current Assets 256 296 192 331
Inventories 30 816 35 279
Other financial assets 11 313 19 184
Current tax receivable 740 1 166
Trade and other receivables 122 958 83 673
Cash and cash equivalents 90 469 53 029
Non-current assets held for sale and assets of 53 964 40 433
disposal groups
Total Assets 886 170 953 774
Equity and Liabilities
Total Equity 449 590 591 070
Shareholders equity 455 949 561 329
Minority interest (6 359) 29 741
Liabilities
Non-Current Liabilities 141 967 155 817
Loans from group companies 584 -
Other financial liabilities 52,203 45,467
Other non-current liabilities 1,990 3,439
Deferred tax 87 190 106 911
Current Liabilities 248 947 178 203
Loans from group companies 891 -
Other financial liabilities 25 041 27 115
Current tax payable 15 867 15 548
Trade and other payables 102 969 74 623
Provisions 18 427 30 926
Bank overdraft 85 752 29 991
Liabilities of disposal groups 45 666 28 684
Total Equity and Liabilities 886 170 953 774
GROUP INCOME STATEMENT
REVENUE 638 271 449 516
COST OF SALES (397 779) (229 016)
GROSS PROFIT 240 492 220 500
OTHER INCOME 65 741 36 810
OPERATING EXPENSES (272 646) (273 124)
IMPAIRMENT EXPENSES (16 754) (44 748)
OPERATING PROFIT (LOSS) AFTER IMPAIRMENT 16 833 (60 562)
EXPENSES
FAIR VALUE ADJUSTMENTS (301) 246 093
OPERATING PROFIT (LOSS) AFTER FAIR VALUE 16 532 185 531
ADJUSTMENTS
INVESTMENT REVENUE 10 211 11 106
INCOME FROM EQUITY ACCOUNTED INVESTMENTS (3 374) (13)
FINANCE COSTS (19 692) (22 519)
PROFIT (LOSS) BEFORE TAXATION 3 677 174 105
TAXATION 1 956 (61 690)
PROFIT (LOSS) FOR THE YEAR 5 633 112 415
ATTRIBUTABLE TO:
EQUITY HOLDERS OF THE PARENT 6 415 114 620
MINORITY INTEREST (782) (2 204)
EARNINGS PER SHARE (CENTS) 1.32 28.67
HEADLINE EARNINGS PER ORDINARY SHARE (CENTS) 3.94 38.20
DILUTED EARNINGS PER ORDINARY SHARE (CENTS) - 27.52
WEIGHTED AVERAGE NUMBER OF SHARES 484 983 399 727
877 904
FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES 484 983 416 478
877 528
CALCULATION OF HEADLINE EARNINGS (R`000)
EARNINGS FOR THE YEAR 6 415 114 620
(PROFIT)/LOSS ON DISPOSAL OF ASSETS 847 8 869
IMPAIRMENT LOSSES 16 754 44 748
TAX EFFECT OF ADJUSTMENTS (4 928) (15 549)
HEADLINE EARNINGS 19 088 152 688
Abridged Group Cash Flow Statement
Audited Audited
Group to Group to
31 August 31 August
2008 2007
R`000 R`000
Cash flow from operating activities 32 043 28 878
Cash flows from investing activities (40 921) (19 388)
Cash flows from financing activities 7 111 39 241
Increase/(Decrease) in cash and cash (1 767) 48 731
equivalents
Cash and cash equivalents at beginning of the 37 866 (10 865)
year
Cash equivalents at the end of the year 36 099 37 866
Less: Assets held for sale (31 382) (14 828)
4 717 23 038
Cash and Cash equivalents 90 469 53 029
Bank OD (85 752) (29 991)
4 717 23 038
Segmental Report
Financial Informatics Fishing Healthcar Biotech-
Services e nology
Group to Group to Group to Group to Group to
31 Aug 31 Aug 31 Aug 31 Aug 31 Aug
2008 2008 2008 2008 2008
R`000 R`000 R`000 R`000 R`000
Revenue 125 900 109 099 274 559 13 998 -
External sales 125 900 106 233 274 559 13 998
Inter Group 2 866
Sales
Segment Result
Operating (9 308) 15 192 25 647 (7 860) (22)
profit/(loss)
Included in (7 171) (1 906) (22 041) (3 508) -
segment results:
(Impairments)/ (6 197) - (9 088) (1 233) -
Reversal of
impairments
Depreciation and (529) (1 906) (12 953) (2 275) -
amortisation
Fair valuation (445) - - - -
of investments
Carrying amount 86 561 114 805 438 479 64 186 181 223
of Assets
Carrying amount 111 825 97 435 224 389 133 851 78 000
of Liabilities
Loss from - - - - (3 374)
associate
Capital 125 1 157 13 207 5 329 -
expenditure
Segmental Report
(continued)
Invest- Media Other Elimi- Group
ments Group nations
Group to Group to Group to Group to Group to
31 Aug 31 Aug 31 Aug 31 Aug 31 Aug
2008 2008 2008 2008 2008
R`000 R`000 R`000 R`000 R`000
Revenue 6 000 114 993 19 407 (25 685) 638 271
External sales - 113 351 4 230 - 638 271
Inter Group 6 000 1 642 15 177 (25 685) -
Sales
Segment Result
Operating (496 186) 4 900 4 890 479 279 16 532
profit/(loss)
-
Included in (479 980) 144 343 515 451 1 332
segment results:
(Impairments)/ 2 342 - - (2 578) (16 754)
Reversal of
impairments
Depreciation and (307) - 343 36 014 18 387
amortisation
Fair valuation (482 015) 144 482 015 (301)
of investments
Carrying amount 740 413 22 920 25 401 (787 818) 886 170
of Assets
Carrying amount 107 563 20 511 29 352 (366 346) 436 580
of Liabilities
Loss from - - - - (3 374)
associate
Capital 211 1 019 666 (1 363) 20 351
expenditure
Segmental Report
(2007)
Financial Informa Fishing Health Biotechno
Services tics care logy
Group to Group to Group to Group to Group to
31 Aug 31 Aug 31 Aug 31 Aug 31 Aug
2007 2007 2007 2007 2007
R`000 R`000 R`000 R`000 R`000
Revenue 72 720 73 882 283 184 18 547 -
External sales 72 720 73 035 283 184 18 195 -
Inter Group Sales - 847 - 352 -
Segment Result
Operating (20 749) 9 847 23 275 (41 828) 250 974
profit/(loss)
Included segment (6 108) (2 873) (12 522) (6 790) 250 974
results:
(Impairments)/ (5 611) (1 200) (935) (2 180) -
Reversal of
impairments
Depreciation and (837) (1 673) (11 587) (4 610) -
amortisation
Fair valuation of 340 - - - 250 974
investments
Carrying amount 112 706 93 312 350 088 44 020 -
of Assets
Carrying amount 121 731 80 460 162 383 160 705 -
of Liabilities
Loss from (13) - - - -
associate
Capital 552 570 11 695 699 -
expenditure
Segmental Report
2007 (continued)
Invest- Media Other Elimina- Group
ments Group tions
Group to Group to Group to Group to Group to
31 Aug 31 Aug 31 Aug 31 Aug 2007 31 Aug
2007 2007 2007 2007
R`000 R`000 R`000 R`000
Revenue 8 432 - 12 350 (19 599) 449 516
External sales - - 2 382 - 449 516
Inter Group 8 432 - 9 968 (19 599) -
Sales
Segment Result
Operating 61 612 - (728) (96 872) 185 531
profit/(loss)
Included segment 79 352 - 1 714 (119 375) 184 372
results:
(Impairments)/ (113 513) - - 78 691 (44 748)
Reversal of
impairments
Depreciation and (438) - (286) - (16 973)
amortisation
Fair valuation 193 303 - 2 000 (200 524) 246 093
of investments
Carrying amount 1 181 104 - 386 327 (1 213 783) 953 774
of Assets
Carrying amount 149 612 - 117 939 (430 126) 362 704
of Liabilities
Loss from - - - - (13)
associate
Capital 36 - 18 461 - 32 013
expenditure
Notes:
The above segmental report has been prepared in accordance with the
disclosure requirements of IAS 14.
Statement of
changes in
equity group
Total Total Retained Attribu- Outside Total
Share table to Share- Equity
holders
Capital Reserve Income Parent Interes
s t
Opening 301 508 10 362 53 390 365 260 49 655 414 915
balance as
previously
reported
Prior year - - (1 140) (1 140) (1 012) (2 152)
adjustments
Balance at 01 301 508 10 362 52 250 364 120 48 643 412 763
September 2006
as restated
Net income - (23) - (23) - (23)
(expenses)
recognised
directly in
equity
Profit for the - - 114 620 114 620 (2 204) 112 416
year
Issue of 85 285 - - 85 285 - 85 285
shares
Transfer - (2 283) (8) (2 291) - (2 291)
Dividends - - (382) (382) - (382)
Business - - - - (16 (16 698)
combinations 698)
Balance at 01 386 793 8 056 166 480 561 329 29 741 591 070
September 2007
Revaluation of - (14) - (14) - (14)
FEC
Profit for the - - 6 415 6 415 (782) 5 633
year
Issue of 16 384 - - 16 384 - 16 384
shares
Decrease in - - 33 511 33 511 (33 -
holdings due 511)
to the
allocation of
shares
Transfer - (8) 25 17 (17) -
Dividends - - (1 195) (1 195) - (1 195)
Business - 113 160 (273 658) (160 498) (1 790) (162
combinations 288)
Balance at 403 177 121 194 (68 422) (455 949) (6 359) 449 590
31 August 2008
ACCOUNTING POLICIES AND IFRS
The abridged consolidated financial information has been prepared in accordance
with IAS 34 - Interim financial reporting and is based on the audited financial
statements of the Group for the year ended 31 August 2008, which have been
prepared in accordance with International Financial Reporting Standards ("IFRS",
the Listing Requirements of the JSE, and the Companies Act of South Africa. The
abridged unqualified financial statements have been audited by the company`s
auditor, PKF (Newlands) Inc., whose report is available for inspection at the
registered office of the company.
The audited results for the year ended 31 August 2008 have been prepared in
accordance with the Group`s accounting policies, which comply with IFRS. The
accounting policies adopted are consistent with those applied in the previous
financial year, with the exception of the adoption of IFRS 7, Financial
Instruments:Dislosures, and the consequential amendments to IAS 1:Presentation
of Financial Statements.
Corporate activities
Acquisitions during the year:
- Acquisition of Tripos Travel (Cape Town) (Pty) Ltd - 51% obtained
for R525 750, paid for by the issue of 416 912 Sekunjalo shares at
68 cents per share, with an effective date of 1 September 2007.
Goodwill of R439 765 arose on the above transaction.
- Acquisition of Events Social Marketing and Productions Afrika (Pty)
Ltd - 51% obtained for R 4 554 338, paid for by the issue of 1 061
538 Sekunjalo shares at 65 cents per share, and the balance in
cash, with an effective date of 1 September 2007. Goodwill of R4
774 715 arose on the above transaction.
- Marine Growers (Pty) Ltd - 100% obtained for R 6 000 000, paid for
in cash, with an effective date of 1 September 2007. Goodwill of
R14 135 625 arose on the above transaction.
As announced on SENS on 30 July 2008, Sekunjalo had entered into an
agreement to underwrite 100% of the Rights issue to be undertaken by
Sekunjalo Health Care Limited ("Rights issue"). The eventual
underwriting obligation in terms of this Rights issue was 99.80%.
Post Balance Sheet Acquisitions:
- Acquired 30% of British Telecommunications Service South Africa
(Pty) Ltd for R27 000 000, which is vendor financed, with an
effective date of 1 September 2008
Disposals
- The Group sold its 51% of Sharenet (Pty) Ltd for R2 277 590 at a profit of
R1 633 175
Group performance
In the year (2008) under review, Sekunjalo continued to increase its business
efficiencies by reporting a vast improvement in operating profits from R60,5m
operating loss after impairments to R16,8 m operating profit after impairments.
However, the overall results for the year have been affected as they do not
reflect fair value adjustments due to the reclassification of the Group`s
Biotechnology interest. The Biotechnology interest, which was previously treated
as an investment in the consolidated financial statements and accounted for as
such, has now been reclassified as an investment in associate due to the Group
obtaining a significant influence over the business. Consequently, profit on the
fair valuation adjustments previously recognised through the income statement
will now be eliminated on consolidation and thus not impact on the Group income
statement.
The Board continues to take action in the current financial year which ensures
that the trend of improving operating efficiencies continues in this tough
economic climate.
Review of portfolio of investments
Fishing and Aquaculture
Premier Fishing (Premier) is the largest black-owned and controlled fishing
company in South Africa.
Premier performed well in the year under review. It has shown a turnaround from
an operating loss of R10,6m per our interim results to an operating profit of
R37,6m (before once off impairments) and a year on year increase in operating
profit from R23,2m in 2007 to R25,6m in 2008.
The majority of Premier`s earnings were generated from lobster (west coast and
south coast), squid, hake and abalone all of which generated earnings in foreign
currency. Premier remains a strong currency hedge as more than 50% of its
revenue is export based.
This improvement in operating profit is mainly due to cost containment and
continued business restructuring despite significantly higher fuel prices. The
effect on costs has been profound as fuel is a major part of a vessel`s catch
costs.
As in previous years, the pelagic business continued to show significant losses
due to the reduction in the total allowable catch (TAC).
Restructuring of the business units will continue until 2010 to ensure that
Premier becomes more efficient and produces greater profits.
Aquaculture
The decision of Sekunjalo, through Premier, to invest in abalone aquaculture and
create an environmentally sustainable fishing resource, is validated by
government`s move to keep the wild abalone sector closed.
Abalone is sought after in the Far East and continues to enjoy premium product
status. Abalone farms continue to deliver excellent results.
Information, Communication & Telecommunications (ICT)
Sekunjalo Technology Solutions Group (Sekunjalo TSG) previously known as
Sekunjalo IT) is a wholly owned subsidiary of Sekunjalo and focuses on acquiring
and growing high-growth, niche-market technology companies. International
partners are Microsoft, Cognos, IBM, Siemens and AME.
The focus of Sekunjalo TSG`s investments is to provide business solutions for
South African corporate and government enterprises
This division`s operating profit for the year amounts to R15,2m (2007: R7,7m)
reflecting a 97% increase. This sterling performance is due largely to the
conclusion of major licensing deals, increased consulting revenue and conclusion
of a major Gauteng Department of Health hospital information system (HIS)
tender.
The following subsidiaries are part of Sekunjalo TSG:
Synergy Business Intelligence (Synergy BI) - a business intelligence solutions
company assisting corporations with their information requirements.
Fios - a leader in delivering performance management solutions to a client base
across a wide range of industries.
Saratoga Software - a software development company focused on building custom-
made software solutions to innovators and corporate customers.
Health System Technologies (HST) - a Sekunjalo Health Care subsidiary company
providing hospital information systems and is accounted for under Sekunjalo
Health Care (SHC) but is managed by Sekunjalo TSG.
- We anticipate that the purchase of HST (by Sekunjalo TSG from SHC)
will be concluded during the course of the coming financial year.
This will provide Sekunjalo TSG access to the government health
sector, which we anticipate will embark on large budgetary spend
during the next five years
The Board continues to monitor the market environment for the listing of the
Sekunjalo TSG business.
Financial Services
Sekunjalo Capital (Pty) Limited, a wholly owned subsidiary of Sekunjalo, is the
holding company for the Financial Services operations within Sekunjalo.
This business is in a developmental stage and made an operating loss of R9,3m
(2007: R20,8m) which is a vast improvement on last year. Investment in
infrastructure and systems continues with a view to growing the business. The
losses will not recur since we have cut costs to ensure a minimum of a break-
even situation for next year.
Healthcare and Pharmaceuticals
Sekunjalo Health Care Ltd (SHC) aims to be a leading health-care company in
South Africa. It intends to achieve this through the acquisition, marketing and
sales of market relevant products.
This division has been significantly restructured for turnaround which has
produced a significant reduction in its operating loss of R7,9m compared to a
R41,8m operating loss last year.
The Pharmaceuticals business, Sekpharma, has focused on its traditional
portfolio of dossiers which include:
- The leading injectible antibiotic Fortum
- The well-established ethical dermatological products Dermovate, Betnovate and
Eumovate
Sekpharma continues to seek partnerships with reputable pharmaceutical
multinationals to market their products in South and Southern Africa.
Wynberg Pharmaceuticals, trading as Rapimed, manufactures medical diagnostic
strips for supply in the public and private market.
Biotechnology
Sekunjalo, through African Biotechnological and Medical Innovation Investments
(Pty) Ltd (ABMI), owns 49% in Bioclones (Pty) Ltd. Bioclones is an R&D company
with 22 global patents in the areas of novel technologies, infectious disease
and cancer treatment molecules.
It has a Biogeneric molecule division with Repotin, a locally produced
recombinant human erythropoietin (EPO) and granulocyte colony-stimulating factor
(GCSF) hormone as its core biogenerics. Repotin, which competes in an EPO global
market of about $12 billion per annum, is manufactured in Centurion at a world-
class cell culture facility.
Enterprise Development
espAfrika/Cape Town International Jazz Festival and Tripos Travel (Tripos)
Both Tripos and espAfrika were acquired at the beginning of the financial year.
The operating profit for these businesses amounts to R4,9m.
espAfrika`s flagship event, the Cape Town International Jazz Festival (CTIJF),
is ranked fourth in the world of leading jazz festivals. espAfrika is rapidly
expanding its service offering and developing a footprint in Africa.
Tripos operates under the Sure Travel franchise and provides the following
services: Corporate Travel Management (CTM), Meetings, Incentives, Conferences &
Events (MICE) and Inbound Tour Operating.
Tripos has established an additional business unit in the form of a Jazz Tourism
Division, promoting synergies between Tripos and espAfrika.
British Telecom (BT)Acquisition post year end
BT is a world provider of communications solutions and services operating in 170
countries. Its principal activities include the provision of networked IT
services globally; and local, national and international telecommunications
services.
BT announced an agreement on 5 November 2008 with Sekunjalo, in which Sekunjalo
will become a 30% shareholder in BT`s South African business. The deal
demonstrates BT`s commitment to the B-BBEE agenda and will provide opportunities
for both parties to accelerate their growth. The agreement is subject to
approval by the Reserve Bank of South Africa.
Group prospects
Looking forward, the Sekunjalo Group`s prospects are positive for the following
reasons:
- It is the empowerment partner of choice to many large and small
businesses and enjoys partnerships with Siemens, Microsoft, Cognos,
IMB, Julphar, GSK and now BT.
- It has solid B-BBEE credentials and an international reputation as a
founder company of the World Economic Forum (WEF) New Champions and
a Community Global Growth Company (CGGC).
- The company`s businesses have all been restructured in the past few
years to achieve greater operational efficiencies and profitability.
- Its investments are poised for further value unlocking by listing on
local and foreign exchanges.
In Fishing, we continue to pursue opportunities for further consolidation in the
industry. In anticipation of tough trading conditions, we are positioning
Premier to deliver strong performance based on a sustainable but cost-efficient
business model.
In the ICT sector, we will continue to grow our businesses and seek selective
acquisition opportunities.
In Biotechnology, Bioclones is embarking on global expansion of the
RepotinRegistered product. Further global expansion will be facilitated by the
development of a significantly scaled-up EPO plant utilising state-of-the-art
technology. This expansion will enable Bioclones to take advantage of the $12
billion global EPO market, which has been growing at an estimated 15% to 20% per
annum.
Dividends
No dividends have been declared for the current period. The Board continues to
work toward payment of dividends in the foreseeable future and believes that the
Group strategy will deliver significant returns on investment.
Withdrawal of cautionary announcement
Further to the cautionary announcements released on SENS on 5 September 2008, 20
October 2008 and 5 November 2008, shareholders are advised that as negotiations
have been terminated caution is no longer required to be exercised by
shareholders when dealing in their securities.
Dr MI Surve M Y Kajee
Executive Chairman CEO
25 November 2008
Cape Town
Directors
*Dr M Iqbal Surve (Executive Chairman); *Mohamed Y Kajee (CEO); *Khalid Abdulla;
*Reverend Vukile Mehana, Mihe Gaomab,The First; Salim Young; Zoliswa A Kota;
Pieter Van Der Merwe; Diane Case**; Norman Noland** *Executive Directors **
Resigned
Registered Address: Sekunjalo House, Block F, The Terraces, Steenberg Office
Park, Tokai, 7945
email: nonqaba@sekunjalo.com
Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 11 Diagonal
Street, Johannesburg
Auditors: PKF (Newlands) Inc, Claremont
Sponsor: Rand Merchant Bank, Johannesburg
Date: 26/11/2008 07:05:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS. |