| Thu 13 Dec 2007, 12:00 | | MCU - m Cubed Holdings - Unaudited financial results for the six months ended |
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MCU
MCU
MCU - m Cubed Holdings - Unaudited financial results for the six months ended
31 August 2007
m Cubed Holdings Limited
Incorporated in the Republic of South Africa)
Registration number: 1998/014568/06
Share code: MCU ISIN: ZAE000033353
("m Cubed" or "the company")
Unaudited financial results for the six months ended 31 August 2007
Income statement
Unaudited Reviewed Audited
6 months 6 months year
ended 31 ended 31 ended 28
August August February
2007 2006 2007
R`000 R`000 R`000
Net revenue 614 46 995 100 816
Cost of revenue (66) (19 900) (36 837)
Gross profit 548 27 095 63 979
Operating expenditure (6 146) (29 443) (62 834)
Results of operating activities (5 598) (2 348) 1 145
Finance income 13 274 16 552 34 938
Impairment of goodwill - - (3 702)
Impairment of investment - - 1 180
Profit/(Loss) before non-trading 7 676 14 204 33 561
items
Disposal of businesses (17 810) 516 498
Net profit/(loss) before taxation (10 134) 14 720 34 059
Taxation (750) (6 887) (11 865)
Net profit/(loss) for the period (10 884) 7 833 22 194
Reconciliation between headline
earnings/(loss) and net
profit/(loss) for the period
Net profit/(loss) for the period (10 884) 7 833 22 194
Disposal of businesses 17 810 (516) (498)
Impairment of goodwill - - 3 702
Impairment of investment - - (1 180)
Headline earnings attributable to 6 926 7 317 24 218
shareholders
Earnings/(loss)per share (cents)
Earnings/(loss) (1.5) 1,1 3,0
Headline earnings/(loss) 0.9 1,0 3,3
Balance sheet
Unaudited Reviewed Audited
6 months 6 months year
ended 31 ended 31 ended 28
August August February
2007 2006 2007
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 740 767 857
Investments 6 690 629 10 460 298 7 061 370
Insurance contracts 29 718 29 167 28 238
Investment contracts 6 660 911 10 431 131 7 033 132
Deferred acquisition cost 18 168 35 588 21 327
Goodwill - 6 700 3 000
Loans and advances 3 694 95 117
6 713 231 10 503 448 7 086 671
Current assets
Receivables and prepayments 34 639 22 211 37 019
Cash and cash equivalents 286 693 362 164 277 158
Current tax asset - 2 067 -
321 332 386 442 314 177
Total assets 7 034 563 10 889 890 7 400 848
Equity and liabilities
Capital and reserves
Ordinary shareholders` funds 314 222 304 560 319 489
Non-current liabilities
Policyholder liabilities 6 626 452 10 403 559 6 988 156
Insurance contracts 31 061 29 296 31 910
Investment contracts 6 595 391 10 374 263 6 956 246
Deferred revenue liability 16 388 31 584 19 380
6 957 062 10 435 143 7 007 536
Current liabilities
Trade and other payables 76 383 150 187 73 139
Current tax liabilities 1 118 - 684
77 501 150 187 73 823
Total equity and liabilities 7 034 563 10 889 890 7 400 848
Number of shares in issue (`000) 738 537 737 925 738 285
Net asset value per share (cents) 42.6 41,3 43,3
Net tangible asset value per 42.6 40,4 42,9
share (cents)
Cash flow statement
Unaudited Reviewed Audited
6 months 6 months year ended
ended 31 ended 31 28 February
August August 2007
2007 2006
R`000 R`000 R`000
Operating activities (349 984) 110 669 (3 731 675)
Cash utilised by operations (363 033) 103 397 (3 755 107)
Finance income 13 274 16 552 34 938
Taxation paid (225) (9 280) (11 506)
Investing activities 359 519 36 918 3 794 219
Additions to property, plant (101) - (738)
and equipment
Proceeds on disposal of - 468 616
property, plant and equipment
Disposal of businesses (7 732) 155 885 156 885
(Increase)/Decrease in 370 929 (119 517) 3 637 396
investments
(Increase)/decrease in loans (3 577) 82 60
receivable
Financing activities - 198 235
Sale of shares by share - 198 235
incentive trust
Net movement in cash and cash 9 535 147 785 62 779
equivalents
Net cash and cash equivalents
at beginning of year 277 158 214 379 214 379
Net cash and cash equivalents 286 693 362 164 277 158
at end of year
Statement of changes in equity
Share Share Foreign Accumu- Total
capital premium currency lated R`000
R`000 R`000 translation profits
reserve R`000
R`000
Balance at 1 March 7 382 227 863 2 123 82 121 319 489
2007
Increase in foreign
currency translation
reserve 5 617 5 617
Net Profit for the
period (10 884) (10 884)
Balance at 31 August
2007 7 382 227 863 7 740 71 237 314 222
Segmental reporting
Net revenue
Recurring Initial
Unaudited Reviewed Audited Unaudited Reviewed Audited
6 months 6 months year 6 months 6 months year
ended ended ended 28 ended ended 31 ended 28
31 August 31 February 31 August August February
2007 August 2007 2007 2006 2007
Rm 2006 Rm Rm Rm Rm
Rm
Wealth
management - 46 95 - - 1
Asset
management - - - - - -
Specialised
investments
, lending
and 1 1 5 - - -
treasury
1 47 100 - - 1
Headline earnings
Unaudited Reviewed Audited
6 months ended 6 months ended year
31 August 31 August ended
2007 2006 28 February
Rm Rm 2007
Rm
Wealth management (13) 5 13
Asset management - - -
Specialised investments,
lending and treasury 20 2 11
7 7 24
Basis of preparation
These interim results have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and in compliance with the Companies Act
of South Africa of 1973, and the Long-term Insurance Act of 1998, and the
Listings Requirements of the JSE Limited. Although an actuarial valuation is not
performed at half-year the directors consider the assumptions used in the
actuarial valuation at 28 February 2007 to continue to be appropriate for these
financial results. The accounting policies are consistent with those of the
previous financial period.
These results have not been reviewed or audited by the company`s auditors.
Nature of business
m Cubed Holdings Limited ("m Cubed" or "the company") historically owned a
number of focused investment services businesses. On 10 November 2004, the board
decided that the best way to unlock and realise maximum value for shareholders
would be to dispose of m Cubed`s business operations, which, following the
merger of the m Cubed and Momentum multi-manager operations, lacked critical
mass. The primary objective of disposing of m Cubed`s businesses in order to
convert these assets to cash to unlock maximum value for shareholders, has
essentially been achieved.
Financial review and corporate activity update
Due to the disposal of several businesses and the reinsurance transaction of the
m Cubed Life book since the publication of the results for the six months ended
31 August 2006, which have resulted in a significantly different group structure
compared to the prior year, these results are not comparable to the results for
that period.
Headline earnings were R6,9 million (2006: R7,3 million) and headline earning
per share was 0,9 cents (2006:1,0 cents) for the period. The loss was R10,9
million (2006: R7.8 million earnings) and the loss per share was 1,5 cents
(2006: 1,1 cents earnings). The loss on disposal of businesses arose from:
Closure of particular business lines following the reinsurance transaction; and
Disposal of subsidiaries in Guernsey.
Recurring income was R1 million (2006: R47 million), while initial income was
Rnil (2006: Rnil).
The disposal of businesses has been largely completed.
In terms of the reinsurance agreement concluded with Alternative Channel Ltd
("Alternative Channel"), the m Cubed Life Ltd ("m Cubed Life") policy book was
reinsured for a payment by Alternative Channel to m Cubed Life of R30 million
less actuarial reserves. This effectively means that Alternative Channel has
assumed responsibility for the proper management of the policyholders` business
with effect from 1 March 2007, and ensures that the policyholders` affairs are
being managed and administered by an experienced group of people and in a
professional manner. The reinsurance transaction, effective 1 March 2007, was
approved by the shareholders on 8 October 2007.
Contingent liabilities
m Cubed is exposed to a contingent liability estimated at a maximum of R50
million in respect of the settlement with a Regulator, referred to in previous
communication with shareholders. The R50 million has been retained by the
Regulator for the due performance in unwinding certain transactions, being the
subject matter of the dispute. Jan S de Villiers has been appointed to work
closely with the Regulator`s forensic auditors to unwind and regularise these
transactions. Good progress is being made in this regard and a resolution is
expected by 30 June 2008. The m Cubed Group is exposed to an additional
contingent liability in respect of tax claimed by SARS in terms of revised tax
assessments issued to m Cubed Specialised Lending (Pty) Ltd, in relation to an
intellectual property sale and leaseback transaction concluded in 1999. This
contingency has not been quantified as objections have been lodged against the
assessment, and the tax counsel that has been appointed to deal with this matter
is of the opinion that this company has a strong case.
Voluntary suspension
Shareholders are further referred to the voluntary suspension announcement
published on SENS on 13 July 2007. The company still has matters outstanding
with SARS, namely to resolve a tax assessment of one of its subsidiaries. The
board is still positive that this matter can be resolved and a further
announcement will be made as soon as the company has more certainty or is in a
position to finalise the abovementioned matter.
Prospects and dividend
Our focus remains on unlocking value for shareholders by concluding and
resolving the abovementioned matters following which the directors propose that
available cash resources will be distributed to shareholders. In light of this
no interim dividend was declared.
For and on behalf of the board of directors
J de Vos du Toit
Chairman
13 December 2007
Registered office:
1st Floor PSG House, Alphen Park, Constantia Main Road, Constantia
Private Bag X3, Constantia, 7848
Telephone 021 799 8000 Facsimile 021 794 4674
Transfer offices:
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg
2000
PO Box 61051, Marshalltown, 2107
Telephone: 011 370 5000, Facsimile: 011 370 5487
Directors: J de V du Toit (Chairman)*, CMB Bothner*, W Roux*, J van Zyl Smit*, *
Non-executive
Company secretary: Probity Business Services (Pty) Ltd
Bankers: The Standard Bank of South Africa Limited
Sponsors: PSG Capital(Pty)Limited
Attorneys: Jan S de Villiers Attorneys
Date: 13/12/2007 12:00:01 Produced by the JSE SENS Department.
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