| Thu 29 Mar 2001, 0:00 | | Aries - Audited Final Results |
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Aries Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1981/003665/06)
("Aries" or "the company")
Audited final results
for the twelve months ended 31 December 2000
Income Statement
Year ended Year ended
31 Dec 31 Dec
2000 1999
R000's R000's
Revenue 99 849 96 277
Continuing operations 36 945 27 998
Discontinued operations 62 904 68 279
Net operating (loss)/profit (550) 7 066
Continuing operations 2 754 6 594
Discontinued operations (3 304) 472
Investment income 1 264 1 072
Income from associate 905 783
Financing costs (5 809) (3 029)
(Loss)/profit before exceptional items (4 190) 5 892
Exceptional items 5 125 -
Trademark/software writeoff (1 750) -
Reorganisation of debt 1 190 -
Profit on sale of packaging business 5 603 -
Profit on sale of investments 3 361 -
Provisions for impairment of
investments (3 279) -
Profit before taxation 935 5 892
Taxation 345 454
Net profit 590 5 438
Number of ordinary shares in
issue (000's) used for calculation
of earnings per share 15 083 13 967
Basic earnings per share in cents 3.91 38.93
Headline earnings per share in cents (30.07) 38.93
Headline earnings per share continuing
operations 9.02 43.02
Headline earnings per share discontinued
operations (39.09) (4.09)
Cash flow statement
Cash flow from operating activities (5 673) 41 830
Cash available from
operating activities 5 673 42 912
Dividends paid - (1 082)
Cash flows from investing activities 45 286 -
Net cash utilised in
investing activities - (53 965)
Cash effects from financing activities (30 131) 153
Net cash inflow/(outflow) 9 482 (11 982)
Balance sheet
Year ended Year ended
31 Dec 31 Dec
2000 1999
R000's R000's
Assets
Non current assets 26 035 66 567
Property, plant and equipment 13 088 48 408
Intangible assets 2 687 3 766
Investments 10 260 14 393
Current assets 13 163 36 598
Inventories 3 875 16 171
Trade and other receivables 9 288 20 427
Total assets 39 198 103 165
Equity and liabilities
Shareholders' equity 29 364 28 773
Non current liabilities 5 003 28 399
Deferred taxation 890 948
Interest bearing debt 3 742 20 014
Non interest bearing debt 371 7 437
Current liabilities 4 831 45 993
Non interest bearing debt 4 004 29 801
Interest bearing debt 393 7 187
Cash and cash equivalents 434 9 005
Total equities and liabilities 39 198 103 165
SUPPLEMENTARY INFORMATION
Depreciation 5 801 3 984
Capital expenditure 11 912 36 812
Capital commitments 500 4 120
Unlisted investments at book value 10 260 14 393
Unlisted investments at
directors' valuation 10 260 14 393
Contingent liabilities 100 -
Net asset value per share in cents 1.95 1.91
Number of ordinary shares
in issue (000's) 15 083 15 083
BASIS OF PREPARATION
The accounting policies used in the preparation of these provisional annual
financial statements are consistent with those used in the annual financial
statements for the year ended 31 December 1999, except as indicated below, and
conform with Statements of Generally Accepted Accounting Practice in South
Africa.
Against the background of a new Statement of Generally Accepted Accounting
Practice, AC131 relating to the treatment of goodwill on business acquisitions,
the group's new accounting policy is to capitalise goodwill on acquisitions and
amortise it over its useful life. The change has no material effect on profit.
A statement of changes in equity is not presented as there have not been any
movements in the year under review.
COMMENTARY
The trading results for the year have been disappointing, due to the packaging
industry maintaining its depressed trading levels of the past few years. It is
for this reason that your directors view the sale of the majority of the
packaging assets, at a profit, as the highlight of an otherwise depressed year
in this industry. Although the final profit on sale was in line with that
projected in the circular to shareholders dated 6 July 2000, the income from
the assets sold was negatively affected by the following: both Aries'
shareholders and the Competition Commission had to approve the transaction,
which resulted in a delay between the announcement of the sale and the actual
date of ownership transfer; a delay in commissioning the refurbished corrugated
board machine resulted in ongoing costs being incurred without attendant
income; additional costs to the recovery of the working capital were incurred;
retrenchment costs of ancillary staff and relocation costs of consolidating the
remaining assets. These non-recurring costs have obviously impacted negatively
on the results of both continuing and discontinued operations.
It should be noted that these issues were anticipated and communicated to
shareholders in the commentary relating to the interim results.
The sale has nevertheless significantly improved the balance sheet, with
gearing almost eliminated. Your directors believe this position to be highly
desirable, given the tough trading conditions in both the information
technology and packaging sectors. Furthermore, the very low gearing allows the
company to continue its diversification drive away from the packaging industry.
Information technology division: Your directors are satisfied with the returns
from this division. These results, at similar levels to those of the previous
financial year, were achieved under more onerous market conditions.
Furthermore, as these businesses are project-based, income is dependent on the
timing of project acceptance.
Packaging division: Over the last few years your directors have remained
concerned about too much production capacity and too little market activity in
the Western Cape. Exploratory talks, initiated by Aries, seeking formal
co-operation with various parties in the Western Cape, resulted in the view
that a merged entity would have a greater impact on the market. Thus, in July
2000, the majority of the Aries packaging assets were sold to Atlantic
Packaging of Pioneer Foods (Pty) Ltd. As mentioned above, the final profit on
sale was in line with that projected. However, significant difficulties are
being experienced in liquidating the working capital employed by this division
and substantial provisions have been taken against those assets not liquidated
to date. These include a write-off of R1,5 million against debtors. Aries also
disposed of its interests in Stelpak during the year 2000 and, since the
year-end, has decided to sell its interest in Agrimanagement Services. The
remaining packaging assets are now all housed at the Prima Box facilities.
Corporate resources: Provisions have been made against assets where it is
considered that such assets may be impaired. This new accounting standard has
required Aries to reduce the value of all investments and assets in instances
where these are viewed as unproductive or potentially overvalued. These include
a write-off of the trade marks in full and a reduction in the carrying value of
in-house developed software. The new standard regulating the write-off of
goodwill requires that this be taken through the income statement as opposed to
an adjustment against retained income, which has been the Aries practice in the
past. In accordance with the new standard, Aries has adopted a policy to write
off goodwill over 5 years for any goodwill arising on future acquisitions.
LISTING ON THE JSE
"Micro-cap" companies have found it increasingly difficult to raise capital and
issue shares for acquisitions since the last quarter of 1998. Furthermore, the
new JSE requirements of R8 million before tax income and R25 million permanent
capital mean that Aries would not be eligible if it were seeking a listing
currently. Accordingly, your directors are evaluating the options available to
the company and will keep shareholders informed.
PROSPECTS
It is difficult to make predictions about the information technology industry
at present. Nevertheless, both Castle Graphics and Psionet have consistently
demonstrated their ability to perform satisfactorily in market conditions
categorised by delayed projects and strong competition. As for the packaging
industry, the aforementioned trading conditions predicate that your directors
will seek to dispose of the remaining interests during 2001. The speed at which
this can be achieved and the pace at which suitable replacement investments can
be secured will greatly dictate the earnings for 2001. In this regard, your
directors are evaluating a number of significant opportunities.
On behalf of the Board
MD Brand JP Wolfson
Chairman Chief Executive
Cape Town
28 March 2001
Transfer Secretaries Registered Office
Mercantile Registrars Limited Unit E1, Centurion Business Park
10th Floor, 11 Diagonal Street Bosmansdam Road
Johannesburg 2000 Milnerton
Executive Directors:
J P Wolfson (Chief Executive); C J Y Browne; J H McIntosh; T C Wray
Non-Executive Directors:
M D Brand (Chairman); P J Petyt; S N Mabaso; E Mabyana (alternate)
