| Mon 14 May 2001, 0:00 | | African Harvest Interim Results |
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For the six months ending 31 March 2001
It is with pleasure that we report our fourth set of interim results. The
attributable and headline earnings of the African Harvest Group (Group) for
the six months to 31 March 2001, ended lower at R29,2 million (46% down).
This equates to earnings per share of 10,44 cents compared to 19,23 cents for
the same period in the previous year, adjusted for the impact of capital
reduction. This is in line with the profit warning issued on 7 March 2001.
The strategy of moving from holding passive investments to one of operating
four distinct and controlled business units has continued. Gray Securities
was sold and realised a net surplus of R12,5 million. The Group will
continue to divest of its remaining non-core investments when these can be
realised at prices which reflect fair value. These investments include:
Airports Company of South Africa (ACSA)
Uthingo (State Lottery Manager).
The results from ongoing operations - all of which are profitable - should be
viewed against the extremely difficult market conditions which have prevailed
in the financial sector during the period under review.
The Group balance sheet, with net assets of about R900 million remains robust
with sufficient liquidity. Cash and cash equivalents at 31 March 2001
amounted to R222 million compared to total current liabilities of R68,4
million. This can be deployed to invest in existing and other activities
which fit the changed strategy of focusing on businesses that are directly
controlled by African Harvest. All listed trading investments have been
marked to market and as at 31 March 2001, the fair value of investments
exceeded the carrying value.
FINANCIAL HIGHLIGHTS
UNAUDITED UNAUDITED AUDITED
6 months 6 months 12 months
31-Mar-01 31-Mar-00 30-Sep-00
R'000s R'000s R'000s
INCOME FROM OPERATIONS AND ASSOCIATES 79,803 107,693 211,380
African Harvest Capital 32,121 38,197 63,895
African Harvest Fund Managers 23,204 8,940 26,859
African Harvest Regional Investments 1,676 3,171 12,839
African Harvest Strategic Investments 22,802 57,385 107,787
Net interest income 12,232 19,802 27,449
Total income incl. associates' retained income 92,035 127,495 238,829
Attributable and headline earnings 29,267 76,853 135,598
Weighted average number of shares in issue280,447,053 280,115,913 280,115,913
Number of shares in issue 280,700,913 280,115,913 280,115,913
EARNINGS PER SHARE (cents)
- Attributable & headline 10.44 27.44 48.41
COMPARATIVE EARNINGS PER SHARE (cents)
- Attributable and headline 10.44 19.23 40.21
OTHER PERFORMANCE RATIOS
Total assets 1,026,075 1,095,038 1,664,793
Total shareholders' funds 875,063 905,866 845,796
Net asset value per share - at book value(cents) 312 323 302
Stock market capitalisation (R billion) 1,095 2,381 1,401
Price high (cents) 550 1,250 1,250
Price low (cents) 250 795 475
Assets under management - total (R billion) 8.8 3.6 7.6
Operating expenses (excl bonuses)to non-
interest income (%) 49.6% 24.9% 25.8%
Number of employees at end of period 107 73 104
Return on equity:
- actual 6.7% 17.0% 16.0%
- proforma adjusted for the capital
repayment (comparatives only) 5.9% 13.3%
AFRICAN HARVEST CAPITAL
African Harvest Capital had a slower than budgeted six months with revenue
down 16% on the comparable period for the preceding year. The main
contributing factor was the under-performance of the specialised fund
management division relative to budget. This business was affected by a
tough trading environment and declining liquidity.
The corporate advisory team has secured some substantial mandates where the
fees will accrue in the second six months and into next financial year.
African Harvest Capital was also involved in the placement of the Euro Bond
Issue on behalf of government and the investment banking team has established
positions that are expected to boost income in the second six months.
Overall, we are confident of a strong second half which will enable budgets
to be met for the full year.
AFRICAN HARVEST FUND MANAGERS
During the period under review, income attributable to African Harvest Fund
Managers Group (AHF), increased by 160% compared with the same period last
year. During the period in which the All Share Index dropped by 2%, the
division did well to increase funds under management by 16% to R8,8 billion.
Funds secured but not yet received, total approximately R700 million.
The unit trust funds have performed very well over the period. The
Aggressive Value Fund, Aggressive Gilt Fund and Women's Initiative Managed
Flexible Fund were placed first over one year in the 2001 Standard & Poor's
Investment Funds Performance Awards. During the same period, African Harvest
Management Company was placed joint first over a one-year period in the
Plexus Awards. The ranking is based on the risk-adjusted performance over
the entire suite of funds offered by a unit trust management company.
Therefore, it is a comprehensive and fair evaluation of overall house
performance.
Institutional performance has mirrored the retail performance over the period
with the funds being ranked sixth out of twenty-four funds in the Fifth
Quadrant Manager Meters Full Discretion Domestic-Only Mandate.
The unit trust management company (Manco) has performed extremely well in
very volatile markets over the last six months. The Manco has attracted over
R700 million (net flows of R460 million) into our suite of nine unit trust
funds. This was achieved in an environment where the market witnessed huge
outflows.
AFRICAN HARVEST REGIONAL INVESTMENTS
Namibian Harvest:
Operating revenue continues to grow. However, for the full financial year,
overall revenue will be down as a result of the decapitalisation of Namibian
Harvest.
Vertex Financial Services:
This Tanzanian operation has secured a number of advisory contracts and is
expected to make a profit for the year.
AFRICAN HARVEST STRATEGIC INVESTMENTS
The holding in Gray Securities was sold. Negotiations regarding the sale of
the holding in Airports Company of South Africa (ACSA) continue.
Finsource has expanded its business and now administers third party funds to
the value of R105 billion.
Optivest Financial Services has R1 billion under management and continues to
grow its book.
Given our changed strategy, income from strategic investments will be
substantially down on last year but we are nonetheless confident in meeting
our target of R30 million for the year.
THE WAY FORWARD
In the remaining months of the current financial year, the likelihood is that
market conditions in the financial sector will remain tough. Accordingly,
the Group still anticipates that headline earnings for the financial year
ended 30 September will be approximately 50% down on last year as mentioned
in the profit warning.
The current Return on Equity (ROE) for the Group is clearly unacceptable.
ROE targets for the operating entities have been set and with a stronger
second six months envisaged, we expect a substantially improved ratio by year-
end.
We believe that we have a number of sound businesses in place with good
people and the ability to grow quality earnings and achieve substantially
higher ROE's over the longer term.
STRATE/ DEMATERIALISATION STATEMENT
African Harvest Limited is scheduled to move to the STRATE system on 9 July
2001. The move is obligatory and it will ensure that we participate in a
settlement process, which is on par with international best practice.
Shareholders will receive a letter and information booklet detailing the
benefits of the new system and informing them of the procedures to be
followed during the dematerialisation process.
JSE SECURITIES EXCHANGE SECTOR CHANGE
We intend to apply to the JSE Securities Exchange to transfer the Company's
(AHV) listing on the JSE from the Re-development sector to the Financial
Services Sector. The JSE is presently conducting sector classification.
RETURN ON EQUITY AND SHAREHOLDERS LOANS
Capital Fund Managers Regional Strategic Group
2001 8.2% 32.0% 19.2% 3.9% 6.7%
2000 20.4% 21.9% 7.7% 12.4% 17.0%
GROUP INCOME STATEMENTS
for the six months ended 31 March 2001
UNAUDITED UNAUDITED AUDITED
6 months 6 months 12 months
31-Mar-01 31-Mar-00 30-Sep-00
R'000s R'000s R'000s
Fees and commission income 35,439 39,135 83,624
Net surplus on sale of investments 26,722 48,456 79,114
Net interest income 12,232 19,802 27,449
Interest received 23,474 20,144 34,061
Interest paid 11,242 342 6,612
Investment income 9,654 12,180 26,948
Other income 5,112 1,559 4,185
TOTAL INCOME 89,159 121,132 221,320
Less: expenses 53,469 38,582 71,034
Operating expenses 52,334 38,130 70,031
Depreciation 1,135 452 1,003
INCOME BEFORE TAXATION 35,690 82,550 150,286
Taxation 6,799 12,060 32,197
INCOME AFTER TAXATION 28,891 70,490 118,089
Share of associates' retained income 2,876 6,363 17,509
INCOME OF THE GROUP 31,767 76,853 135,598
Less: outside shareholders' interest 2,500 - -
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS 29,267 76,853 135,598
Earnings per share (cents)
- Attributable and headline 10.44 27.44 48.41
GROUP BALANCE SHEETS
as at 31 March 2001
UNAUDITED UNAUDITED AUDITED
6 months 6 months 12 months
31-Mar-01 31-Mar-00 30-Sep-00
R'000s R'000s R'000s
ASSETS
Property, plant and equipment 5,898 2,942 5,464
Investment in associated companies 133,224 236,168 201,161
Non-trading investments 351,830 288,090 282,241
Long-term loans 22,039 58,782 7,230
Deferred taxation 9,136 5,629 14,013
OTHER NON-CURRENT ASSETS 3,229 1,500 2,875
Non-current assets 525,356 593,111 512,984
Trading investments and receivables 192,003 184,243 377,531
Other receivables 86,740 57,364 135,829
Cash and cash equivalents 221,976 260,320 638,449
CURRENT ASSETS 500,719 501,927 1,151,809
1,026,075 1,095,038 1,664,793
EQUITY AND LIABILITIES
Share capital 70,029 70,029 70,029
Share premium 264,196 326,988 264,196
Non-distributable reserve - 20,924 -
Retained Income 540,838 487,925 511,571
SHAREHOLDERS' FUNDS 875,063 905,866 845,796
Outside shareholders' interests 2,500 - -
Long-term interest-bearing liabilities 65,045 8,720 80,004
Net liability in respect of structured
investments 2,100 - 2,980
Deferred taxation 12,908 2,759 13,510
NON-CURRENT LIABILITIES 82,553 11,479 96,494
Trading account liabilities 4,020 18,078 549,153
Other liabilities 34,965 82,203 101,723
Taxation owing - 3,738 1,978
Shareholders for dividends 29,474 73,674 69,649
CURRENT LIABILITIES 68,459 177,693 722,503
1,026,075 1,095,038 1,664,793
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
for the six months ended 31 March 2001
Non Total
Share Share Distr. Retained Sholders'
Capital Premium Reserves Income Funds
R'000s R'000s R'000s R'000s R'000s
Balance at 1 October 1999 70,029 1,727,568 35,733 396,263 2,229,593
Capital Reduction of 500
cents per share - (1,400,580) - - (1,400,580)
Net income attributable to
shareholders - - - 76,853 76,853
Share of associates' retained
income - - 6,363 (6,363) -
Transfer to distributable
reserves on sale of associates - - (21,172) 21,172 -
Balance at 31 March 2000 70,029 326,988 20,924 487,925 905,866
Transferred to distributable
reserve - - (20,924) 20,924 -
Goodwill written off - (62,792) - - (62,792)
Dividend declared - - - (56,023) (56,023)
Net income attributable to
shareholders - - - 58,745 58,745
Balance at 30 Sept 2000 70,029 264,196 - 511,571 845,796
Net income attributable
to shareholders - - - 29,267 29,267
Balance at 31 March 2001 70,029 264,196 - 540,838 875,063
CONDENSED GROUP CASH FLOW STATEMENTS
for the six months ended 31 March 2001
UNAUDITED UNAUDITED AUDITED
6 months 6 months 12 months
31-Mar-01 31-Mar-00 30-Sep-00
R'000s R'000s R'000s
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash received before changes in
operating assets 13,851 77,996 36,350
Net cash (utilised)/received in respect
of operating assets and liabilities -408,798 387,357 340,742
Cash (utilised)/generated by operations -394,947 465,353 377,092
Taxation paid -4,202 -23,538 -40,914
NET CASH (UTILISED)/GENERATED BY
OPERATING ACTIVITIES -399,149 441,815 336,178
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received on acquisition of
subsidiary companies 175 - 285,192
Cash received in respect of associated
companies 85,392 - 265,013
Cash utilised in respect of other investments -44,385 -64,853 -158,508
NET CASH RECEIVED/(UTILSED) BY INVESTING
ACTIVITIES 41,182 -64,853 391,697
CASH FLOWS FROM FINANCING ACTIVITIES
Cash payments to shareholders -40,175 -811,299 -811,353
Cash (utilised)/raised in respect of
long-term liabilities -18,331 - 27,270
NET CASH UTILISED IN FINANCING ACTIVITIES -58,506 -811,299 -784,083
NET DECREASE IN CASH AND CASH EQUIVALENTS -416,473 -434,337 -56,208
Cash and cash equivalents at the beginning
of period 638,449 694,657 694,657
Cash and cash equivalents at the end of
period 221,976 260,320 638,449
EXPLANATORY NOTE
The Group's financial statements have been prepared based on accounting
policies consistent with previous years, in all material aspects, and in
accordance with the South African Statements of Generally Accepted Accounting
Practices.
BY ORDER OF THE BOARD
Mashudu E Ramano Philip Leon Campher Takula Jenkins Tapela
Executive Chairman Chief Operating Officer Company Secretary
This report is available on the African Harvest website:
http:/www.africanharvest.co.za
African Harvest House, Boundary Terraces, 1 Mariendahl lane, Newlands, Cape
Town, 7700. P.O. Box 23855 Claremont 7735. Tel: +27-21-670 4600 Fax: +27-
21-670 4651.
Directors: M.E. Ramano (Executive Chairman), F.J. Robertson (Deputy
Chairman), D.L. Barnes, C.B. Brayshaw, P.L. Campher, M.S. Dondolo, A.K. Peer,
Company Registration No: 1997/13827/06
Transfer Secretaries: Mercantile Registrars
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