| Mon 19 Mar 2001, 0:00 | | Vestacor Limited - Annual Results |
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VESTACOR LIMITED
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED28 FEBRUARY 2001
INCOME STATEMENT YEAR ENDED 28 FEBRUARY 2001
Note 2001 2000
R'000 R'000
Revenue 5 343 3 917
Other operating income 1 4 897 3 693
Unrealised profit on investments 99 495 -
Operating expenses (16 317) (4 946)
Profit from operations 93 418 2 664
Finance costs (299) (10)
Cancellation of option agreement (1 520) (2 320)
Income from associates - 13 994
Profit before taxation 91 599 14 328
Taxation (2 260) (374)
Net profit for the year 89 339 13 954
Weighted number of shares in issue ('000) 163 747 72 611
Earnings per share (cents) 54.6 19.2
Headline earnings per share (cents) 54.6 22.4
BALANCE SHEETAS AT 28 FEBRUARY 2001
Note 2001 2000
R'000 R'000
Assets
Equipment 185 249
Share option scheme loan 23 301 24 822
Deferred tax 2 965 -
Investments 2 236 579 74 650
Receivables 5 011 10 212
Taxation 280 -
Cash & cash equivalents 26 447 93 961
Total assets 294 768 203 894
Equity and Liabilities
Capital and reserves 279 284 190 161
Share capital 16 375 16 375
Share premium 147 460 147 676
Non-distributable reserve 59 364 -
Accumulated profits 56 085 26 110
Non current liabilities
Deferred tax 4 752 -
Current liabilities 10 732 13 733
Payables 9 855 11 905
Short term loans 500 -
Taxation 377 1 828
Total equity and liabilities 294 768 203 894
Number of shares in issue ('000) 163 747 163 747
Net asset value per share (cents) 171 116
ABRIDGED CASH FLOW STATEMENTYEAR ENDED 28 FEBRUARY 2001
2001 2000
R'000 R'000
Cash flows (utilised in)/generated
from operating activities (3 951) 223
Cash flows utilised in investing activities (64 063) (14 029)
Cash flows generated from financing activities 500 78 957
Net (decrease)/increase in cash and cash equivalents (67 514) 65 151
Cash and cash equivalents at beginning of year 93 961 28 810
Cash and cash equivalents at end of year 26 447 93 961
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 28 FEBRUARY 2001
2001 2000
R'000 R'000
COMMENTARY
1 Other operating income
Other operating income includes the following:
- Interest received 2 105 1 901
2. Summary of investments
Percentage Market Carrying
Interest Value Value
R'000 R'000
Listed
Fashion Africa 25.5% 2 483 9 448
Retail Investment Holdings/Richway 33.3% * 12 750 11 919
Renaissance 5.5% 6 300 8 857
DNA 7.6% 22 699 29 866
Other - 64 106
44 296 60 196
Unlisted
Look & Listen 33.3% * 10 000 5 025
Retail Africa 20.0% * 1 164 1 164
Vestacor IT Investments 100.0% * 3 879 3 879
Moresport 100.0% * 166 315 166 315
181 358 176 383
* Directors' valuation 225 654 236 579
3. Investments sold after year end Sale Value
R'000
Listed
Renaissance* 8 857
DNA 29 866
38 723
*Bedding and assembly business
Vestacor's business is the acquisition, turnaround and repositioning of
under-valued companies. Vestacor's results are best analysed in terms of growth
in the net asset value as opposed to earnings growth.
Vestacor is pleased to announce that in line with its strategy to grow its
investment base, the net asset value per Vestacor share has increased from 116
cents to 171 cents at 28 February 2001. This equates to an increase in net
asset value of 47%.
During the year under review, Vestacor executed a number of transactions which
facilitated the growth in its net asset value. These included the acquisition
of 100% of Moresport and the development of a programme to substantially
enhance its returns. Vestacor identified the Glicks acquisition for Renaissance
which enabled Renaissance to deliver substantial cash returns to its
shareholders. As part of this transaction, Vestacor acquired an equity stake in
the enlarged Renaissance group. Vestacor thereafter initiated the disposal of
the bedding and assembly businesses of Renaissance to Relyant.
Having been fundamentally instrumental in the acquisition of Micor by DNA in
1999, Vestacor sold 38.2 million of its DNA shares for R28.5 million in March
2001, thereby unlocking a profit of some R10 million to Vestacor.
These transactions represent a realisation of the first fruits of the strategy
adopted by Vestacor in its re-positioning statement to shareholders published
in April 1999.
To ensure that the financial statements represent a meaningful presentation of
the business philosophy of Vestacor, investments are not consolidated nor have
the earnings attributable to associate company investments been equity
accounted. Investments have been revalued as required by AC133. AC133 is a new
accounting statement dealing with financial instruments. The statement became
effective in respect of companies with year-ends commencing on or after 1
January 2001. Vestacor has, however, adopted AC133 this year. In respect of
goodwill previously written-off against share premium, as and when such share
premium is recovered, this amount is transferred from retained income to a
non-distributable reserve.
Moresport comprises The Pro-Shop, Sportsmans Warehouse, Outdoor Warehouse and
Sportshoe World. During the year under review, Moresport has been repositioned
and developed so as to facilitate an "owner manager environment" with each
chain being the direct responsibility of its own "managing director".
Considerable effort has been undertaken in expanding the distribution network
of each chain in South Africa. Moresport has achieved strong growth for the 11
months ended 28 February 2001.
Vestacor, equally, together with BOE and the Strathmore Trust, hold, through
Retail Investment Holdings, 77% of Richway. Richway's strategy is to build a
retail property portfolio comprising A-grade retail centres situated in
affluent decentralised metropolitan areas. As part of this strategy Richway
acquired, subject to certain conditions, the following centres:
* 58% of Canal Walk Shopping Centre
* 50% of Kolonnade Shopping Centre
* 50% of Northgate Shopping Centre
* 50% plus one share of Longbeach Mall
* 100% of Walmer Park Shopping Centre
These acquisitions are to be funded through a combination of debt and equity.
Vestacor has underwritten a rights issue in Fashaf and in so doing has
increased its stake in Fashaf after Vestacor's year-end to some 60%. Vestacor
will continue to assist the management of Fashaf in re-positioning and
returning the business to profitability. Vestacor has been instrumental in
several initiatives within the Fashaf group, which will improve its trading
activities, product mix and distribution. The investment in Fashaf has not been
written down to market value as in our opinion the market value does not
reflect a permanent diminuation in the underlying value of Fashaf.
During the year Look & Listen has increased its store base from six to a total
of eleven music stores. The chain comprises a combination of mall based and
value centre formats. Vestacor has assisted in the transformation of Look &
Listen from a small entrepreneurial business into a dominant music and
ancillary product retailer. The five recently opened new-generation stores
represent, in our opinion, an extremely attractive and compelling shopping
experience. The management team has been boosted considerably and a strong
systems infrastructure has been installed. All the Look & Listen stores are
profitable.
Vestacor holds 20% of Retail Africa. Retail Africa's business is that of
retail property development, broking, leasing and tenant co-ordination.
Vestacor has entered into an agreement to acquire the remaining 80% of Retail
Africa for a maximum of 10 million Vestacor shares. The acquisition is subject
to Retail Africa meeting certain profit warranties. The intention is that
Retail Africa will develop its business model to include East and West Africa.
Prospects
Vestacor is experiencing good quality deal flow. The group's strong
intellectual capital base will ensure that Vestacor takes advantage of the best
opportunities presented.
Your directors are pleased with the progress of Vestacor and are optimistic
that in the short to medium term Vestacor will be able to deliver substantial
realised returns to its shareholders.
AB Rubenstein
Chief Executive Officer
M Nielsen
Chief Financial Officer
Johannesburg
19 March 2001
Directors
GB Rubenstein (Chairman), AB Rubenstein (CEO), M.Nielsen (CFO), LG Rapp,
JMP Desmidt*, KG Hodgson*, JC Livingstone*, MJ Kaplan*, JA Mackay, CF Turner*
*non-executive
