| Wed 30 May 2012, 16:00 | | Report For The Year Ended 29 February 2012 |
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SILP - Stimulus Investments Limited - Condensed Consolidated Annual Financial
Report For The Year Ended 29 February 2012
Stimulus Investments Limited
(Incorporated in the Republic of Namibia)
(Registration number: 2004/482)
(NSX Share code: SILP)
ISIN Code: NA000A1JN0Z7
("Stimulus")
Condensed Statements of Comprehensive Income for the year ended 29 February 2012
Group Company
Reviewed Reviewed Reviewed Reviewed
2012 2011 2012 2011
N$ N$ N$ N$
Revenue 39,635,354 33,378,279 13,163,765 7,560,325
Cost of sales (12,327,180)(11,853,591) - -
Gross profit 27,308,174 21,524,688 13,163,765 7,560,325
Other income 159,630 3,254,413 48,000 3,361,369
Operating expenses (18,846,397)(14,766,241) (4,509,843) (2,309,352)
Operating profit 8,621,407 10,012,860 8,701,922 8,612,342
Investment revenue 933,043 339,174 675,591 118,095
Fair value adjustments 18,550,243 7,232,429 19,575,343 8,598,080
Finance costs (62,013,952) (4,633,742) (61,709,901) (4,280,168)
(Loss) / profit before taxation
(33,909,259) 12,950,721 (32,757,045) 13,048,349
Taxation (637,938) (1,058,105) (174,591) (43,290)
(Loss) / profit for the year
(34,547,197) 11,892,616 (32,931,636) 13,005,059
Other comprehensive income 2,691,501 - - -
Total comprehensive (loss) / income
(31,855,696) 11,892,616 (32,931,636) 13,005,059
(Loss) / profit attributable to:
Owners of the parent (34,837,798) 11,435,288 (32,931,636) 13,005,059
Non-controlling interest 290,601 457,328 - -
(34,547,197) 11,892,616 (32,931,636) 13,005,059
Total comprehensive (loss) / income attributable to:
Owners of the parent (32,616,251) 11,435,288 (32,931,636) 13,005,059
Non-controlling interest 760,555 457,328 - -
(31,855,696) 11,892,616 (32,931,636) 13,005,059
Condensed Statements of Financial Position at 29 February 2012
Group Company
Reviewed Reviewed Reviewed Reviewed
2012 2011 2012 2011
Assets N$ N$ N$ N$
Non-current assets 159,184,248 122,276,964 157,534,581 121,858,645
Property, plant and equipment
17,395,424 14,353,976 - -
Intangible assets 3,980,243 4,765,243 - -
Investment in subsidiary - - 9,868,425 8,843,325
Loan to group company - - 9,857,575 9,857,575
Investments in unlisted equity
132,240,000 97,739,758 132,240,000 97,739,758
Loans and receivables 5,568,581 5,417,987 5,568,581 5,417,987
Current assets 108,692,960 31,536,063 102,705,036 24,309,649
Inventories 975,750 1,230,827 - -
Trade and other receivables
5,396,591 423,295 5,040,000 205,152
Prepayments 1,041,666 334,967 1,041,666 334,967
Cash and cash equivalents 101,278,953 29,546,974 96,623,370 23,769,530
Total assets 267,877,208 153,813,027 260,239,617 146,168,294
Equity and Liabilities
Equity 8,206,571 63,956,703 9,890,818 65,659,759
Share capital 1,000 1,000 1,000 1,000
Reserves 6,377,216 4,155,669 - -
Retained earnings 399,342 58,074,445 9,889,818 65,658,759
Non-controlling interest 1,429,013 1,725,589 - -
Non-current liabilities 256,183,191 87,515,470 250,000,000 80,397,546
Redeemable preference shares
250,000,000 80,392,000 250,000,000 80,392,000
Secured bank loans 3,087,090 3,253,638 - -
Loan from related parties 2,085,257 3,146,972 - 5,546
Deferred tax liabilities 1,010,844 722,860 - -
Current liabilities 3,487,446 2,340,854 348,799 110,989
Loans from related parties 277,639 74,787 277,639 74,787
Trade and other payables 2,899,621 2,209,108 25,000 25,000
Current tax payable 310,186 56,959 46,160 11,202
Total equity and liabilities
267,877,208 153,813,027 260,239,617 146,168,294
Condensed Statements of Changes in Equity for the year ended 29 February 2012
Share Revaluation Retained Non-controlling
capital reserve income interest
Group N$ N$ N$ N$
Balance at 1 March 2010 1,000 4,155,669 46,639,157 1,554,173
Changes in equity
Total comprehensive income for the year
- - 11,435,288 457,328
Dividends - - - (483,340)
Changes in ownership interest - - - 197,428
Total changes - - 11,435,288 171,416
Balance at 1 March 2011 1,000 4,155,669 58,074,445 1,725,589
Changes in equity
Total comprehensive income for the year
- 2,221,547 (34,837,798) 760,555
Dividends - - (22,837,305) (483,340)
Changes in ownership interest - - - (573,791)
Total changes - 2,221,547 (57,675,103) (296,576)
Balance at 29 February 2012 1,000 6,377,216 399,342 1,429,013
Company
Balance at 1 March 2010 1,000 - 52,653,700 -
Changes in equity
Total comprehensive income for the year
- - 13,005,059 -
Total changes - - 13,005,059 -
Balance at 1 March 2011 1,000 - 65,658,759 -
Changes in equity
Total comprehensive income for the year
- - (32,931,636) -
Dividends - - (22,837,305) -
Total changes - - (55,768,941) -
Balance at 29 February 2012 1,000 - 9,889,818 -
Condensed Statements of Cash Flows for the year ended 29 February 2012
Group Company
Reviewed Reviewed Reviewed Reviewed
2012 2011 2012 2011
N$ N$ N$ N$
Cash generated from operations
5,532,381 7,700,815 3,160,375 4,550,529
Interest income 933,043 339,174 675,591 118,095
Finance costs (62,013,952) (4,633,742) (61,709,901) (4,280,168)
Tax paid (464,771) (1,335,054) (139,633) (63,848)
Net cash (used in) / from operating activities
(56,013,299) 2,071,193 (58,013,568) 324,608
Net cash (used in) / from investing activities
(16,587,130) 6,106,812 (16,100,593) 5,269,901
Net cash (used in) / from financing activities
144,332,408 (252,404) 146,968,001 31,617
Net increase in cash and cash equivalents
71,731,979 7,925,601 72,853,840 5,626,126
Cash and cash equivalents at beginning of the year
29,546,974 21,621,373 23,769,530 18,143,404
Cash and cash equivalents at end of the year
101,278,953 29,546,974 96,623,370 23,769,530
NOTES
1. Statement of compliance
These condensed consolidated financial statements for the year have been
prepared in accordance with IAS 34, Interim Financial Reporting. The
condensed consolidated financial statements should be read in conjunction
with the annual financial statements for the year ended 28 February 2011.
2. Investments in unlisted equity
Investments in unlisted equities are carried at fair value with fair value
adjustments recognised in profit and loss for the year.
3. Preference share capital
Preference share capital is classified as a liability if it is redeemable
on a specific date or at the option of the shareholder or if dividend
payments are not discretionary. Dividends thereon are recognised in profit
or loss as finance costs.
4. Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year.
LISTED INSTRUMENTS
Stimulus has 2,500,000 (2011: 1,236,800 - see below for information on the
recapitalisation) preference shares in issue, which shares are listed on
the Namibian Stock Exchange. The ordinary shares of Stimulus are not listed
on any Exchange.
COMMENTARY: REVIEW OF RESULTS
Stimulus owns a majority stake in the Joe`s Beerhouse Group of Companies, which
results are incorporated in the Stimulus Group Financial Statements. In order to
provide users with a better understanding of Stimulus` results pertaining to its
private equity investments, the company`s unconsolidated results, cashflows and
financial position are presented in addition to those of the Group.
Stimulus` investment portfolio delivered satisfactory results during the year
under review as evidenced not only by the growth in dividends received by
Stimulus but also the individual investees` performances manifested by revenue
figures and profit growth in line with, and in some cases, above expectations.
This is applicable to each investee business and thus testimony to the success
of the restructuring exercise of the portfolio as reported during the previous
financial reporting period.
Stimulus was recapitalised on 31 October 2011 through the issue of 2,500,000
redeemable preference shares at a total amount of N$250,000,000. At the same
time, the original preference shares issued in 2004 were redeemed at their
capital value of N$80,392,000 and a final dividend of N$46,651,029 was paid to
the 2004 preference shareholders, resulting in a total dividend return to the
2004 preference shareholders over the seven years that these shares have been in
issue of N$91,349,221. This equates to a 10.57% effective annualised after-tax
return to preference shareholders.
The market values of the Stimulus investment portfolio for purposes of the
recapitalisation were determined by means of independent valuations performed by
Mr C.P. ("Charles") Hattingh of PC Finance Research CC using the discounted cash
flow method of valuation. These market values were also applied by the directors
in determining the value of the portfolio at 29 February 2012.
Shortly after recapitalisation, Stimulus was able to apply an amount of N$15.95
million in the acquisition of an additional equity stake in one of its existing
investee companies, thereby increasing the market value of its investment
portfolio (excluding cash) to N$157,534,581 as at 29 February 2012. After
providing for the preference dividend set out below, Stimulus had an amount of
N$97,563,370 available for further investments at 29 February 2012. The
portfolio is therefore 62% invested.
The holders of Stimulus` listed preference shares are entitled to 80% of all net
cash returns realised in the company, provided that the preference shareholders
earn at least the prescribed hurdle rate on their subscription value. With the
recapitalisation on 31 October 2011 and based on the independent valuations
performed by Mr Charles Hattingh, hurdle rate was achieved and all realised and
unrealised returns up to that date were distributed. The realised returns of the
portfolio subsequent to the recapitalisation on 31 October 2011 are below the
hurdle rate and as such the current realised returns for the period from 1
November 2011 to 29 February 2012 are distributed to the preference shareholders
only. Based on the market value of the portfolio at 29 February 2012, the net
asset value as at 29 February 2012 ascribable to each preference share is 10,366
cents per share. Following the payment of the dividend detailed below, this
value will reduce to 10,202 cents per share.
RISK MANAGEMENT
Risk management is a key ingredient in the successful management of the
portfolio and we will continue to review and update our post deal risk
management processes on an ongoing basis.
PROSPECTS
Access to capital and an acute skills deficit are undoubtedly two of the key
challenges facing the Namibian private sector. Private sector development is key
to the economic growth of any country with Namibia being no exception. The
ability of private equity entities to provide capital and strategic support
draws the link between capital and entrepreneurship. In addition, Black Economic
Empowerment ("BEE") and private equity are increasingly emerging as bedfellows
due to the emphasis on transfer of ownership via BEE transactions.
For an industry that is expected to become an increasingly important asset class
in Namibia, the reality is that private equity is a new asset class for Namibia.
This novelty factor is accompanied by three issues, namely the lack of
legislative and regulatory framework, the lack of Private Equity Managers with
meaningful track records and a generally poor governance track-record in
unlisted investments.
Stimulus fills a niche in that it has extensive, in-house skills, a successful
private equity track-record, high standards of corporate governance, as well as
51% black ownership, which, in terms of the Financial Sector Charter,
constitutes Stimulus as a black company.
Stimulus, due to its recapitalisation in October 2011, has in excess of N$97
million available for investments. Stimulus` Board and management are
consequently actively seeking private equity investment opportunities within the
defined investment objectives of maximising returns to preference shareholders
by investing in carefully selected unlisted companies with high quality
management, a stable financial position and good cash generation or healthy
growth prospects as well as identifiable niches or areas of specific competence.
EVENTS AFTER THE REPORTING DATE
The directors disclose that Stimulus has entered into negotiations regarding a
transaction concerning the Joe`s Beerhouse Group of Companies.
DIVIDEND DECLARATION
The Directors have resolved that an amount of N$4,100,000 (2011: N$15,039,488)
be declared as a final dividend to the preference shareholders, which translates
into a dividend of 164 cents per preference share (2011: 1,216 cents per
preference share). The current dividend amount represents the total realised
after-tax cash profits of Stimulus Investments Limited, after adjusting for fair
value gains, for the period from 1 November 2011 to 29 February 2012. The
profits for the period until the recapitalisation on 31 October 2011 have been
distributed as dividends at that date. The salient details of the dividend are:
Last day to trade: Friday, 15 June 2012
Securities start trading ex-dividend: Monday, 18 June 2012
Last day to register: Friday, 22 June 2012
Payment date: Friday, 06 July 2012
Note: Payments will be made electronically to the bank account details as
provided to Transfer Secretaries (Pty) Ltd. Holders who have changed banking
details are advised to inform Transfer Secretaries (Pty) Ltd accordingly.
AUDITORS REVIEW OPINION
The condensed financial statements for the period ended 29 February 2012 were
reviewed by SGA Chartered Accountants & Auditors. The unqualified review opinion
is available for inspection at the Company`s registered office.
ACKNOWLEDGEMENTS
Stimulus is Namibia`s leading private equity investment company and has managed
to build a reputable and recognised track-record in this highly specialised
field. We would like to thank our investors for their continued support, input
and trust. We would furthermore like to thank the management and staff of our
underlying investment companies for the strong growth reflected in the portfolio
which is indicative of their hard work and commitment to their respective
businesses. Finally, we thank our directors for their guidance and stewardship
throughout the year.
Monica Kalondo
Managing Director
Windhoek, 30 May 2012
Sponsor on the NSX: Namibia Equity Brokers
Date: 30/05/2012 16:00:02 Produced by the JSE SENS Department.
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