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PLD
PLD
PLD - Paladin Capital - Interim results for the six months ended 31 August 2009
PALADIN CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2007/032836/06)
Share code: PLD
ISIN: ZAE000138970
("PALADIN" OR "THE COMPANY")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
Condensed income statement
for the six months ended 31 August 2009
Unaudited Audited
31 Aug 09 31 Aug 08 28 Feb 09
Notes Rm Rm Rm
Income
Investment income 10.9 12.1 24.0
Fair value losses on financial (0.8) (2.2)
instruments
Other operating income 19.0 18.1 0.5
Total income 29.9 29.4 22.3
Expenses
Marketing, administration and (3.9) (16.1) (9.1)
other expenses
Total expenses (3.9) (16.1) (9.1)
Results of operating activities 26.0 13.3 13.2
Finance costs (9.5) (3.6) (12.5)
Share of profits/(losses) of 81.4 1.3 (43.6)
associated companies
Net income/(loss) before taxation 97.9 11.0 (42.9)
from continuing operations
Taxation (1.1) (3.5) (0.2)
Net income/(loss) from continued 96.8 7.5 (43.1)
operations
Net profit for the period from 8.7
discontinued operations
96.8 7.5 (34.4)
Attributable to: 96.8 7.5 (34.4)
- non-controlling interest 0.8 2.8
- equity holders of the company 96.8 6.7 (37.2)
Attributable to equity holders of 96.8 6.7 (37.2)
the company
Non-headline items 3 32.4 (1.5) 19.2
Headline earnings/(loss) 129.2 5.2 (18.0)
Earnings/(loss) per share (cents)
- attributable 22.1 1.7 (9.5)
- headline/diluted headline 29.5 1.4 (4.6)
Dividend per share (cents)
Interim 2.5 2.5
Final 2.5
Number of shares (million)
- in issue 445.9 385.0 396.2
- weighted average 437.8 385.0 390.6
Condensed statement of
comprehensive income/(loss)
Net income/(loss) of the group 96.8 7.5 (34.4)
Total comprehensive income/(loss) 96.8 7.5 (34.4)
for the period
Attributable to: 96.8 7.5 (34.4)
- non-controlling interest 0.8 2.8
- equity holders of the company 96.8 6.7 (37.2)
Condensed statements of changes in
owners` equity
for the six months ended 31 August 2009
Unaudited Audited
31 Aug 09 31 Aug 08 28 Feb 09
Rm Rm Rm
Ordinary shareholders` equity at 602.0 633.6 633.6
beginning of period
Net shares issued 192.8 4.4 26.7
Total comprehensive income/(loss) 96.8 6.7 (37.2)
Common control (116.3)
Dividend paid (9.9) (12.3) (21.1)
Ordinary shareholders` equity at end of 765.4 632.4 602.0
period
Non-controlling interest 1.1 1.7
Beginning of period 1.7 1.1 1.1
Net income for period 0.8 2.6
Movement in interest in subsidiaries (1.7) (0.3)
Dividend paid (0.8) (1.7)
Total equity at end of period 765.4 633.5 603.7
Condensed statement of financial position
at 31 August 2009
Unaudited Audited
31 Aug 09 31 Aug 08 28 Feb 09
Notes Rm Rm Rm
Assets
Property, plant and equipment 0.4
Intangible assets 5.2
Investment in associated companies 2 941.0 714.0 709.8
Deferred income tax 0.3 1.1
Financial assets
Equity securities 32.2 2.6
Loans and advances 1.8 24.9 19.5
Receivables 10.2 2.0
Cash and cash equivalents 1.5 2.1 0.1
Non-current assets held for sale 36.7
Total assets 944.3 789.3 771.8
Equity
Ordinary shareholders` equity 765.4 632.4 602.0
Non-controlling interest 1.1 1.7
Total equity 765.4 633.5 603.7
Liabilities
Insurance contracts 1.7
Financial liabilities
Borrowings 177.8 122.5 150.7
Trade and other payables 1.1 31.6 1.1
Liabilities directly associated 16.3
with non-current assets classified
as held for sale
Total liabilities 178.9 155.8 168.1
Total equity and liabilities 944.3 789.3 771.8
Net asset value per share (cents) 172 164 152
Condensed statement of cash flows
for the six months ended 31 August 2009
Unaudited Audited
31 Aug 09 31 Aug 08 28 Feb 09
Rm Rm Rm
Net cash flow from operating activities 17.5 (48.5) (60.7)
Net cash flow from investment activities (43.1) (100.5) (71.1)
Net cash flow from financing activities 27.0 146.7 131.4
Net increase/(decrease) in cash and cash 1.4 (2.3) (0.4)
equivalents
Cash and cash equivalents at beginning of 0.1 4.4 4.4
period
Cash and cash equivalents at end of 1.5 2.1 4.0
period
- Continued operations 1.5 2.1 0.1
- Discontinued operations 3.9
Contribution to headline earnings
for the six months ended 31 August 2009
Unaudited
31 Aug 09 31 Aug 08 28 Feb 09
Rm Rm Rm
Recurring headline earnings 50.8 52.2 104.3
Equity accounted headline earnings from 52.9 52.8 101.0
associates
Other income and expenses (2.1) (0.6) 3.3
Non-recurring headline earnings/(loss) 98.9 (32.2) (86.4)
Marked-to-market profits/(losses) from
Thembeka 97.3 (32.2) (86.4)
Other income and expenses 1.6
Funding and STC (20.5) (14.8) (35.9)
Paladin (8.0) (3.6) (12.9)
Thembeka (12.5) (11.2) (23.0)
Total headline earnings/(loss) 129.2 5.2 (18.0)
Statistics
Recurring HEPS (cents) 11.6 13.6 26.7
Recurring HEPS after funding and STC 6.9 9.7 17.5
(cents)
HEPS (cents) 29.5 1.4 (4.6)
Notes to the financial statements
for the six months ended 31 August 2009
1. Basis of presentation and accounting policies
The condensed interim consolidated financial statements have been prepared
in terms of IAS 34 - Interim Financial Reporting and should be read in
conjunction with the annual financial statements for the year ended 28
February 2009, which have been prepared in accordance with IFRS.
The accounting policies applied in the preparation of the interim
consolidated financial statements are consistent with those used in the
previous year, except for the standards noted below which is effective for
the financial year beginning 1 March 2009:
IAS 1 (revised) - `Presentation of financial statements` and IFRS 8 -
`Operating Segments`. The adoption of these standards has no material
effect on the results, nor has it required any restatement of the results.
2. Investment in associated companies
Unaudited Audited
31 Aug 09 31 Aug 08 28 Feb 09
Rm Rm Rm
Carrying value
Listed 367.1 213.3 246.1
Unlisted 573.9 500.7 463.7
941.0 714.0 709.8
Directors` valuation of unlisted 526.6 591.9 306.7
investments
3. Non-headline items
(net of tax and non-controlling interest)
Impairment of investments 54.7 10.1
Net profit on sale of subsidiaries (17.7)
and non-controlling interest
Non-headline items of associated (4.6) (1.5) 9.1
companies
32.4 (1.5) 19.2
4. Commitments and contingencies
The company did not have any capital commitments or contingencies at 31 August
2009.
5. Related party transactions
Paladin sold its investment of 74,9% in PSG Capital (Pty) Ltd for R25 million
and bought the invesment of 9,4% in Petmin during the period under review. PSG
Group was party to both transactions as part of the internal restructuring.
The loan with PSG Corporate Services (Pty) Ltd amounted to R178 million as at
31 August 2009 and accrues interest at PSG`s lending rate plus 50 basis
points.
6. Share capital and premium
Unaudited
31 Aug 09
Rm
Balance at beginning of period 504.6
Issue of shares for Petmin 92.0
acquisition
Issue of shares in terms of the 101.3
restructuring*
Share issue cost (0.5)
Balance at the end of the period 697.4
* This includes the Mainfin, Share Incentive Trust and Kumani transactions.
Commentary
Paladin, an investment company, originated from the PSG Group stable and
remains its preferred investment vehicle in industries other than the
financial and agri-related sectors. Its investment portfolio currently
comprises 13 investments.
Comprehensive details of the portfolio are contained in the pre-listing
statement and rights issue circular which has been distributed to
shareholders and is also available on the website at
www.paladincapital.co.za.
Results
Paladin`s headline earnings and attributable earnings per share increased to
29,5 cents (2008: 1,4 cents) and 22,1 cents (2008: 1,7 cents) respectively,
mainly as a result of favourable marked-to-market movements in Thembeka
Capital`s listed investments in the JSE, PSG and Capitec Bank. Thembeka`s
contribution to Paladin`s headline earnings amounted to R94,5 million (2008:
R35,9 million headline loss).
Recurring headline earnings are the board`s predominant measure of Paladin`s
financial performance. The sustainable earnings from subsidiary and
associated companies are included in recurring, whereas marked-to-market
profits/losses and once-off items are disclosed as non-recurring headline
earnings.
Recurring headline earnings per share and recurring headline earnings per
share (after funding and STC) decreased by 15% to 11,6 cents and 29% to 6,9
cents respectively. This is mainly as a result of a loss contribution from
GRW. The GRW Group, which manufactures aluminium and steel road tankers, was
severely affected by the downturn in the economy and thus the Paladin board
deemed it prudent to write down the investment from R91m to R39m, its current
market related value, which value has been consistently used in the
computation of intrinsic value. The company has however turned profitable
again in July 2009 and future prospects look promising. Other investee
companies performed to expectation, with most posting earnings better than
that for the comparative period.
Paladin`s net asset value per share increased by 13% to 172 cents.
Corporate action
- Paladin`s successful listing on the AltX.
- The acquisition of a 50% interest in Curro Holdings, a private school group
for R50 million cash consideration on 1 July 2009.
- The acquisition of a 9,4% interest in Petmin for R92 million from PSG Group
by means of a share swap on 1 March 2009.
- The disposal of Paladin`s 25,1% interest in Mainfin to its vendors.
- With African Unity Insurance having acquired an additional business,
Paladin`s interest diluted from 54% to 43%.
Intrinsic value at 31 August 2009
Company Description % held % of Value
portfolio Rm
Thembeka BEE investment company 49% 26% 229
CIC FMCG 49% 15% 136
Precrete Mining support services 22% 13% 117
Petmin Diversified miner 9% 11% 100
Erbacon Construction 26% 9% 78
Curro Private education 50% 6% 50
GRW Tank manufacturing 40% 4% 39
Lesotho Milling 25% 4% 38
Milling
Protea Non-ferrous foundry 50% 3% 30
Gietery
IQuad Outsourcing services 43% 3% 29
Topfix Construction support 18% 2% 20
African Life and related 43% 1% 13
Unity insurance
Axon Scrip lending 35% 1% 6
Other 1% 5
Total investments 100% 890
Net debt 18% (163)
Total market-related value 727
Shares in issue (m) 446
Market-related value per share (cents) 163
Market-related value per share at the last practical date 179
(cents)
Market-related value per share after the rights issue 165
(cents)*
Intrinsic value is calculated by using
market values for the listed investments
and market-related values for unlisted
investments.
* Based on the assumption that the rights
issue will be fully subscribed.
Rights issue
Paladin is in the process of raising R150 million through a renounceable rights
issue. PSG will follow at least R50 million of its rights and has renounced the
remaining rights in favour of its shareholders. Indications are that the full
amount will be raised and will be utilised to take advantage of future
opportunities. In addition, the rights issue will result in Paladin broadening
its shareholder base.
Prospects
The board is confident about the quality of the investments and the prospects
for the future. Our investee companies are well capitalised and positioned to
grow earnings and market share in their respective industries. Paladin will
continue to add value to its investee companies through active input on a
strategic level.
Dividend
The board has reconsidered Paladin`s dividend policy and, given its long term
growth strategy, decided not to pay dividends for the foreseeable future.
On behalf of the board
Jannie Mouton Francois Swart
Chairman Chief Executive Officer
Stellenbosch
7 October 2009
www.paladincapital.co.za
Directors: JF Mouton (Chairman), FW Swart (CEO)*, J Bezuidenhout (Financial
Director)*, E de V Greyling #, KP Harris#, JA Holtzhausen, PJ Mouton, JD Wiese
# (* executive # independent non-executive)
Secretary and registered office: PSG Corporate Services (Pty) Limited, 1st
Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600 PO Box 7403,
Stellenbosch, 7599
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Sponsor: PSG Capital
Date: 07/10/2009 17:10:01 Produced by the JSE SENS Department.
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