| Tue 6 Feb 2001, 0:00 | | Alacrity Financial Services Limited - Audited Grou |
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ALACRITY FINANCIAL SERVICES LIMITED
(Registration number 1994/000078/06)
(Formerly Prestasi Financial Services Limited)
HIGHLIGHTS
- R20 million turnaround as Alacrity returns to profitability
- Strategic investment partner acquires 34,99% stake
- Operating companies exceed profit forecasts for the year
- Restructuring programme completed
AUDITED GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000
Income statement
Year Year
ended ended
Dec 00 Dec 99
R000 R000
Revenue from operations 121 303 122 598
Net interest (204) 4 825
Total revenue 121 099 127 423
Less operating expenses 119 119 143 249
Operating profit 1 980 (15 826)
Share of losses from associates (147) (316)
Profit before non-trading items 1 833 (16 142)
Headline adjusting items 368 (1 462)
Profit before taxation 2 201 (17 604)
Taxation - (2)
Profit after taxation 2 201 (17 606)
Headline adjusting items:
- Profit on disposal of interests - (3 465)
- Exceptional items (1 700) -
- Goodwill amortisation 1 332 -
- other - 4 929
Attributable to headline profits 1 833 (16 142)
Headline earnings/(loss)
per share (cents) 1,4 (15,4)
Earnings per share (cents) 1,7 (16,8)
Dividends per share (cents) 0 0
Number of shares (millions)
- issued 129,7 121,1
- weighted average 129,7 104,6
Balance sheet
As at As at
Dec 00 Dec 99
R000 R000
Ordinary shareholders' funds 17 058 10 675
Deferred income 28 506 -
Long-term liabilities
- Finance leases 4 035 4 056
Capital employed 49 599 14 731
Fixed assets 6 367 9 767
Intangible assets 5 485 20 602
Investment in associates 323 81
Loans receivable 4 056 4 056
Pre-paid - IT costs 47 975 -
Current assets
- bank balances 11 696 50 941
- other current assets 18 044 12 711
29 740 63 652
Current liabilities
- bank overdrafts 9 555 856
- other interest bearing liabilities 2 454 -
- non-interest bearing liabilities 32 338 82 571
44 347 83 427
Net current liabilities (14 607) (19 775)
Employment of capital 49 599 14 731
Cash flow statement
Year Year
ended ended
Dec 00 Dec 99
R000 R000
Cash generated by operating
activities 4 942 338
Movement in working capital (53 112) -
Taxation paid - -
Cash available from operating
activities (48 170) 338
Cash utilised in investing
activities
Subsidiaries and businesses:
- acquired (1 948) 4 698
- sold - 4 700
Loans and investments - (1 581)
Net fixed assets acquired (1 491) (3 834)
Net cash inflow/(outflow) from
investing activities (3 439) 3 983
Cash generated from financing activities
Long-term liabilities 595 427
Net cash inflow/(outflow) from
financing activities 595 427
Net decrease in cash and cash
equivalents (51 014) 4 748
Cash and cash equivalents at
beginning of period 50 085 45 337
Cash balances of subsidiaries acquired 3 070 -
Cash and cash equivalents at
end of period 2 141 50 085
Statement of changes in equity
Share Share
capital premium Reserves Total
Rm Rm Rm Rm
At January 1 2000 1 257 7 641 1 777 10 675
Share issues and
awaiting issue 84 4 098 4 182
Attributable profit 2 201 2 201
1 341 11 739 3 978 17 058
Notes - Basis of accounting
The financial information has been prepared on the historical cost basis. The
accounting policies used in preparing the financial information are consistent
with those of the previous year, except that goodwill arising after 1 January
2000 is accounted for as an asset in the balance sheet and amortised over a
maximum period of 5 years.
Commentary
Strategic overview
During the period under review Alacrity's restructuring programme was completed
and the Group focused on consolidating its position as a leading insurance
broker. Elements of the restructuring included:
1. Renaming the holding company from Prestasi Financial Services, while the
brand name was retained by the major subsidiary, Prestasi Brokers;
2. The sale of the premium administration department and business outsourcing
division to Computer Sciences Corporation Limited (CSC). An information
technology outsourcing contract was also concluded to cover the majority of
Alacrity's IT development and training requirements until 2010.
Alacrity has adopted a single platform insurance administration policy. The
Group is now able to deliver service in line with client expectations and has
laid the foundation to further improve infrastructure with a view to offering a
world class service;
3. Refining the interaction of all systems with the banking systems and
ensuring that premium collections are working effectively;
4. Acquiring two further independent brokerages which has seen the Group grow
its insurance premium handling towards R600 million per annum.
A difference of opinion on the termination of an intermediary agreement between
Compass Insurance Company Limited and Alacrity has been resolved by Arbitration
in Alacrity's favour during December. Compass has indicated that they intend to
pursue whatever remedies are available but the legal counsel for Alacrity
advised that there is no foundation for such action.
The Group is now in a position to negotiate favourable contracts on behalf of
its clients with major insurance companies.
Financial performance
Alacrity's restructuring programme, aimed at enhancing operational and
financial efficiency within the Group, has begun to deliver tangible benefits.
All major operating subsidiaries exceeded their profit forecasts for the year.
After posting a profit of R0,1 million for the first six months, trading
conditions improved in the second half of the year and the Group has posted a
profit of R2,2 million or 1,7 cents per share. The turnaround of approximately
R20 million is proof of the resilience in the Group and the benefit derived
from the changed structure.
Following the completion of the outsourcing agreements with CSC, the balance
sheet has been restructured. The Group has no long-term liabilities except
financial leases, resulting in a much stronger balance sheet.
Non-recurring items of R1,7 million arose mainly from a reversal of over
provisions from previous years.
Headline earnings improved from a negative 15,4 cents per share to a 1,4 cents
per share.
The results for the year to December 1999 included revenue from Compass
Insurance Company Limited and Statsure (Pty) Limited which were sold during
that period. When the income from these companies is excluded, revenue for 1999
amounted to R92,1 million. Consequently, Alacrity's revenue increased by 32%
over the corresponding period to total R121,3 million.
No dividend will be paid for this financial year.
Post year-end transactions
1. Pamodzi Investment Holdings Ltd, a black-controlled investment company,
acquired 34,99% of the ordinary issued shares in private transactions with
certain shareholders. Pamodzi is an investment holding company focusing on the
information technology, telecommunications, food and related services and the
financial services industries.
2. In order to maintain the shareholding of Pamodzi at a level of 34,99%,
Alacrity has entered into an ordinary share subscription agreement with that
company to issue a maximum of a further 8,2 million shares for R2,9 million (35
cents per share) to it. Should the required number of shares to be issued be
less than 8,2 million, the purchase consideration will prevail.
3. Alacrity has entered into a Preference Share Subscription Agreement with
Gensec Bank Limited which will inject R26,86 million cash into the Group. The
proceeds will be used to fund future acquisitions and eliminate all debt on the
balance sheet. The preference shares will be issued to Gensec Bank on 26 March
2001.
The normal approvals from shareholders and the competition commission will be
required.
Outlook
Trading conditions in the core short-term insurance broking business improved
during the latter part of the year and look set to continue in 2001. The
potential benefits of the relationship with newly acquired shareholders,
Pamodzi, together with the enhanced IT systems and improved negotiating
position of Alacrity, will ensure that the Group's financial performance will
continue to improve. Alacrity's strategic objective is to entrench its position
as one of the top three independant insurance brokers and aims to manage annual
premium income of R1 billion by the end of the 2002 financial year.
By order of the board
Hancke Scheepers Jan Erasmus
Chairman Chief Executive Officer
Johannesburg
6 February 2001
Directors
C H H Scheepers (Chairman), J M D Erasmus* (Chief Executive Officer), C G
Erasmus, B D James*, S D Levitt* (British), D Masson, S M Mogale, M H Muller*,
D C Pentz*, L C Zama.
* Executive
Transfer secretaries
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg 2001
Registered office
Third Floor
The Towers
28 Plein Street
Johannesburg 2001
