Johannesburg - Investment holding company
Sekunjalo Investments [JSE:SKJ] on Wednesday reported headline earnings per share of 2.64 cents for the year ended August 2010 from 1.55 cents a year ago.
No dividends were declared as the board continues to work towards payment of dividends in the foreseeable future and believes that the group strategy will deliver significant returns on investment.
The company increased its asset base to R807m from R774m in the previous year. This was achieved by the subscription of the 5% economic interest in national defense and civil safety company Saab SA, as well as increasing the value of its operating businesses. This acquisition led the way for other opportunities and will enable the group to diversify its portfolio of investments to other sectors in the economy by virtue of it being a partner of choice, it said.
During the year, Sekunjalo continued to increase its focus on improving business efficiencies and eliminating non-core assets and loss making divisions. The global economic challenges had its expected impact on the operating businesses and were largely averted by proactive steps. The group has undergone a focused restructure over the last 18 months, primarily targeted at overhead structures and operating efficiencies. It was also a pre-emptive action anticipating the global economic crisis and the effect on the underlying business units.
The performance in the underlying investments in subsidiaries and associates has seen a good improvement compared to the previous year. The pains of the past 18 months of restructuring have been rewarded, Sekunjalo said.
Despite tough market conditions, revenues increased by 9% to R436.9m.
"The executive management has responded well to the current environment by reducing risks to an acceptable level and maintaining or lowering cost structures within each business unit. The group's gross profits increased by 31%, underscoring the success of the measures undertaken during the restructuring process and cost efficiency drive," it said.
Total borrowings from financial institutions have declined by 37% to R33m in line with the strategy of better debt management. The group is largely unleveraged and there are significant opportunities for future acquisitions for growth.
With the acquisition of the British Telecom investment in the prior year and the new subscription in Saab SA during the year under review, the unlisted strategic private company investment value grew by 61% to R153m. This has increased the group asset base by 8% which is in line with group strategy.
Looking ahead, the group said as an investment holding company, its primary aim is to increase the value of its investments.
"We are in the midst of a global economic shift, which will culminate in the world's major investors taking a closer look at emerging markets and at Africa specifically. Through its skills base, world class financial systems, natural resources and infrastructure, South Africa is the obvious launch pad for multinationals looking to expand into Africa," it said.
"Aside from encouraging prospects from our core operational investments in Premier Fishing and the technology cluster, we have a strong base to launch into Africa given our strategic ventures with British Telecoms and Saab SA. We will also seek new partners that are keen to expand into South Africa and Africa," it said.
Projections show that the group will create between 100 to 300 jobs, mainly in its marine businesses in the forthcoming year, directly benefiting the communities.
"We believe that Sekunjalo is well set to increase its net asset value in the year ahead through organic growth, acquisitions and strategic initiatives," it concluded.