| Thu 26 Apr 2001, 0:00 | | Tigon Limited - Audited Financial Results |
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Tigon Limited
Audited financial results for the year ended 31 January 2001
- Headline earnings +40%
- Headline earnings per share +38%
- Headline earnings annual
average compound growth over
past five years +123%
Consolidated summary income statement
Year ended Year ended
31.1.2000 31.1.2001
R000's R000's
520 366 Revenue 762 649
277 968 Headline earnings 388 824
249 903 Trading and financial services 356 135
28 065 Net interest received 32 689
277 968 Net profit before taxation 388 824
- Taxation -
277 968 Headline earnings 388 824
- Exceptional item (104 000)
277 968 Attributable earnings 284 824
181 708 Accumulated profit at start of year 459 676
459 676 Accumulated profit at end of year 744 500
Supplementary information
Year ended Year ended
31.1.2000 31.1.2001
R000's R000's
1 123 999 Shares in issue (000's) 1 124 548
1 106 856* Weighted average shares in issue (000's) 1 124 252
25,1* Headline earnings per share (cents) 34,6
25,1* Earnings per share (cents) 25,3
-* Dividend per share (cents) -
*Adjusted for share split of 10:1 during the year
Statement of changes in equity
Year ended Year ended
31.1.2000 31.1.2001
R000's R000's
299 704 Balance at beginning of year 649 638
2 827 Currency translation reserve* 9 496
69 139 Issue of share capital 1 800
277 968 Net profit for the year 284 824
649 638 Balance at end of year 945 758
*Not recognised in the income statement
Consolidated summary balance sheet
Year ended Year ended
31.1.2000 31.1.2001
R000's R000's
ASSETS
400 483 Non-current assets 320 898
140 483 Fixed and intangible assets 164 898
260 000 Investments 156 000
508 423 Current assets 708 956
8 526 Inventories 13 462
122 278 Receivables 162 531
355 473 Secured advances 521 854
22 146 Cash and cash equivalents 11 109
908 906 Total assets 1 029 854
EQUITY AND LIABILITIES
649 638 Capital and reserves 945 758
180 164 Share capital 181 964
9 798 Non-distributable reserves 19 294
459 676 Accumulated profit 744 500
10 347 Non-current liabilities 18 361
10 347 Long-term liabilities 18 361
248 921 Current liabilities 65 735
236 612 Payables and guarantees 63 633
12 309 Bank overdrafts 2 102
908 906 Total equity and liabilities 1 029 854
Consolidated summary cash flow statement
Year ended Year ended
31.1.2000 31.1.2001
R000's R000's
210 982 Cash flow from operating activities 14 287
(270 358) Cash flow from investing activities (24 317)
77 778 Cash flow from financing activities 9 200
18 402 Net change in cash resources (830)
(8 565) Cash resources at beginning of year 9 837
9 837 Cash resources at end of year 9 007
Financial results
Headline earnings for the current year increased by a solid 40% to R388,8
million. Attributable earnings increased by 3% to R284,8 million after an
adjustment for the long-term investment held in ShawCell Telecommunications
Limited which, in compliance with Generally Accepted Accounting Practice,
required a write-down of R104-million to market value. Headline earnings per
share for the year were 34,6 cents and the price/earnings ratio was 19, based
on headline earnings and a year-end closing share price of R6,55.
These are the sixth year-end results of the company, which listed on the JSE
Securities Exchange ("JSE") in May 1995 and is now listed under the Financial
Services sector. With an annual average compound growth in headline earnings
per share of 113% since year one, Tigon has given investors by far the highest
return on investment of any company listed on the JSE over the same period.
Group investments
During the year under review we concentrated on growing existing operations as
effectively as possible with the emphasis on offshore earnings. In addition, a
number of investments have been made, some of which have already contributed
significantly to Group profits:
c Tigon's offshore subsidiary P Tandem Investments Limited P acquired a 51%
stake in US incorporated Janus International. Janus holds the exclusive
distribution rights to the premier Aristocrat range of gaming machines in most
of South America. Aristocrat is the world leader in both video gaming and slot
machines and Janus is the only distributor ever accorded exclusive rights to
almost an entire continent. Janus sells a portion of its machines direct into
the market, but also places machines on a participation basis. This strategy
will enable the company to share in the profits of casinos in prime locations
across the whole continent, thereby optimising returns on the capital employed.
The Group increased its stake in InkTec SA by 49% after having identified this
as a high-growth operation.
During the period under review Tigon entered into an underwriting agreement
with PSC Guaranteed Growth, an investment vehicle headed by Jack Milne of
Progressive Systems College which is guaranteed to beat the weighted average
performance of all domestic equity unit trusts. In the six months after
launching, this company delivered returns to investors of over 60%,
outperforming every domestic as well as every domestic "off-shore" unit trust.
Tigon participates in 50% of the outperformance of the unit trusts.
Cotton King diversified its activities by the acquisition of Dyecomber which
operates a cotton comber bleaching plant. With the capacity they have
available, this operation is set to become the sixth largest world producer of
this product. Cotton King itself has expanded its production to cope with
increased demand from export customers.
Agreement has been reached with a major cellphone service provider in Hong Kong
to pilot KwicTEL, the latest version of our cellphone billing management
system, with two major financial institutions, and discussions are at an
advanced stage for similar arrangements in Australia and Singapore.
Future prospects
The Group has concentrated on diligently developing those of its ventures which
have demonstrated dependable earnings growth potential - particularly those
with foreign earnings.
Since the year end the Group has engaged in litigation with the former owners
of EuroPoint and seeks restitution based on substantial fraudulent
misrepresentation. As the Tigon balance sheet value of this acquisition is
zero, the litigation holds no downside risk to Tigon's earnings. However, the
order sought by the Group provides for the return of R19 million in cash plus
interest plus some 28 million Tigon shares (aggregate value at year end P
approximately R210 million). Accordingly, a successful judgement is expected to
have a significant impact on both Tigon's earnings and share price.
Whilst bad investments unfortunately make media headlines, certain of our
long-held investments are realising their promise, after the expenditure of
considerable effort and dedication. We have no doubt that Tigon's history of
success will continue next year.
G P Porritt 26 April 2001
On behalf of the board Pietermaritzburg
DIRECTORS: G P PORRITT, S H BENNETT, A M R HODGKINSON, BMTHOMAS
TIGON ANNOUNCES 40% INCREASE IN HEADLINE EARNINGS
PRESS RELEASE
Announcing a 40% increase in headline earnings to R388.8 million for the year
ended 31 January 2001, Tigon has maintained its position as the JSE's top
performing company over the six years since its listing in May 1995.
Tigon has delivered a 123% compound annual growth in headline earnings since
listing.
Revenue for the period was up 40% to R762.6 million, while headline earnings
per share improved 33% to 34.6c.
Attributable earnings increased by 3% to R284.8 million after a R104 million
write-down in Tigon's interest in ShawCell Telecommunications, in accordance
with Generally Accepted Accounting Practice (GAAP).
Tigon's core business is the provision of finance and financial services to
third parties and joint venture companies in which it is invested. It
identifies owner-managed businesses with major growth potential, which it
unlocks by providing capital and, more importantly, hands-on expertise in key
areas. This ability to add value for potential partners enables Tigon to
negotiate favourable entry levels, thereby maximising its return on investment.
A substantial portion of its business is conducted through joint ventures from
which it derives a share in the trading profits, as well as fees earned for
services rendered and interest earned on loans advanced.
Chief executive officer Gary Porritt says the group concentrated on growing
existing operations and expanding its offshore earnings base during the year.
Tigon's offshore subsidiary, Tandem Investments, acquired a 51% stake in
US-based Janus International, which has exclusive rights to distribute the
Aristocrat range of gaming and video machines throughout most of South America.
Janus sells machines direct to the market, but also places them on a
participation basis, enabling it to share in the profits from gaming across
South America.
Tigon also increased its stake in the fast-growing InkTek SA by 49%.
The group facilitated the launch of PSC Guaranteed Growth, an investment
vehicle headed by Jack Milne of Progressive Systems College, by underwriting a
guarantee to beat the weighted average performance of all domestic equity unit
trusts. Launched in June last year, the R100 million fund has delivered returns
to investors of more than 60%, outperforming every domestic as well as every
offshore unit trust. In return for its guarantee and fielding the costs of the
fund, Tigon participates in 50% of the outperformance of the unit trusts. The
fund is now virtually fully subscribed and will be expanded to accommodate
demand from members of the public jaded by flaccid unit trust returns.
Cotton King expanded production to cope with increased export demand, and
diversified its activities through the acquisition of Dyecomber, which operates
a cotton comber bleaching plant. Dyecomber has sufficient capacity to become
the sixth largest producer of this product in the world.
In another development, agreement was reached with a major Hong Kong-based
cellphone service provider to pilot KwicTEL, an advanced cellphone bill
management system. KwicTEL will be piloted with two major financial
institutions and discussions are well advanced for similar arrangements in
Singapore and Australia.
Porritt says Tigon is seeking to recover cash and shares through litigation
against the former owners of EuroPoint on the basis of substantial and
fraudulent misrepresentation of EuroPoint's financial state. Because this
investment is valued at zero on Tigon's balance sheet, the litigation holds no
downside risk to Tigon's earnings. The group is seeking to recover R19 million
in cash, plus interest, and about 28 million Tigon shares collectively valued
at R210 million at yearend. A successful judgment would have a significant
impact on both Tigon's earnings and share price.
The problems at EuroPoint should not detract from the excellent performance of
the group's longer-held investments, says Porritt. "Our focus has been on
developing those ventures which have demonstrated dependable earnings growth,
particularly those with foreign earnings."
Porritt adds that he expects Tigon's history of success will continue in the
next financial year.
ISSUED FOR : Tigon Limited
CONTACT : Garry Porritt Tel : (033) 394 2854 or
Sue Bennett Tel : (011) 440 5640
FAX NO: : (033) 394 2218 or (011) 440 5642
E-MAIL : Tigon@tigonlimited.com
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart Tel : (011) 325 4195
Cell: 082 443 6399
FAX NO : (011) 325-4199
E-MAIL : Tish@tspr.co.za
DATE : 26 April, 2001
