| Wed 30 May 2001, 0:00 | | Pennystocks Investments Limited - Abridged Audited |
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PENNYSTOCKS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/002549/06)
("Pennystocks")
PENNYSTOCKS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/002549/06)
("Pennystocks")
Abridged audited results for the period ended 31 March 2001
ABRIDGED GROUP INCOME STATEMENTS
12 months 12 months
31 March 31 March
2001 2000
R'000 R'000
Revenue (30 948) (20 780)
Interest and dividend income 7 867 7 592
Net loss from share trading (38 815) (28 372)
Net realised loss (26 399) (14 381)
Net unrealised loss (12 416) (13 991)
Operating costs (2 045) (2 546)
Net loss before taxation (32 993) (23 326)
Taxation: (2000 - reversal of
deferred taxation) - 757
Net loss attributable to ordinary
shareholders (32 993) (22 569)
Weighted average number of
shares in issue 77 179 876 68 777 894
Loss and headline loss per
share (cents) (42,75) (32,81)
ABRIDGED CASH FLOW STATEMENTS
12 months 12 months
31 March 31 March
2001 2000
R'000 R'000
Cash outflow from operating activities (22 315) (8 538)
Cash utilised by operations (28 509) (16 055)
Income from investments 7 867 7 592
Finance costs (73) (75)
Taxation paid (2) -
Dividends paid (1 598) -
Cash inflow/(outflow) from
investing activities 49 726 (115 043)
Net decrease/(increase) in investments 49 726 (115 043)
Cash (outflow)/inflow from
financing activities (1 644) 156 272
Proceeds from the issue of shares - 156 272
Cash utilised to buy back shares (1 644) -
Net increase in cash and c
ash equivalents 25 767 32 691
Cash and cash equivalents
at beginning of year 33 240 549
Cash and cash equivalents
at end of year 59 007 33 240
Cash and cash equivalents include bank balances and cash.
ABRIDGED GROUP BALANCE SHEETS AT 31 MARCH 2001
12 months 12 months
31 March 31 March
2001 2000
R'000 R'000
ASSETS
Non-current 83 581 145 724
Net investments at market value 83 581 145 724
Current 59 483 33 899
Bank balances and cash on deposit 59 007 33 240
Accounts receivable 476 659
Total assets 143 064 179 623
equity and liabilities
Capital and reserves 140 073 175 982
Shareholders' funds 140 073 175 982
Current liabilities 2 991 3 641
Accounts payable 2 991 3 641
Total equity and liabilities 143 064 179 623
Number of shares in issue 76 519 100 77 782 800
Net asset value per share (cents) 183,1 226,2
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share capital
and Total
share shareholders'
premium Reserves funds
R'000 R'000 R'000
Balance at 31 March 2000 194 803 (18 821) 175 982
Shares bought back during year (1 644) - (1 644)
Net loss for year - (32 993) (32 993)
Dividends on "A" ordinary shares - (1 272) (1 272)
Balance at 31 March 2001 193 159 (53 086) 140 073
Comments on the results
It is the accounting policy of Pennystocks to value all investments at
market value, reflecting the revaluations as a profit or loss. Thus, in the
opinion of the directors earnings per share are largely irrelevant while
emphasis should be placed on the change in net asset value per share over
the longer term.
Pennystocks' investment philosophy has been to take three to five-year views
on shares. The adopted strategy has been to buy shares in small but strong
companies, with good earnings records and to wait for the share prices of
the purchased shares to re-rate upwards towards historically expensive
levels. Over the past two years, this philosophy has failed to achieve the
highly satisfactory absolute returns of the past.
In particular, over the past year to 31 March 2001, those sectors of the JSE
Securities Exchange South Africa ("JSE") in which Pennystocks specialises
have been poor places in which to invest. The JSE Financial Services Sector
(a sector in which Pennystocks was heavily invested at the beginning of the
period) fell by 26%, the JSE Small Cap index was down 18%, JSE Industrials
fell 23% and Banks by 1%. In line with this, Coronation, which was
Pennystocks' largest holding at the beginning of the period, fell
spectacularly from grace. Fortunately, most of this holding was sold earlier
in the year at well above current prices. Other stalwarts such as Investec
also failed to perform but reasonable success was achieved in trading the
large retail banking shares.
The best performing sectors on the JSE have been the resources sectors which
have not been within Pennystocks' traditional area of expertise. The further
relaxation of Exchange Controls during 2000 which allowed investors to
increase their amount of off-shore investments and the negative sentiment
following the Zimbabwe crisis resulted in investors selling many of their
small cap shares. As a result, the ratings of small companies fell to levels
last seen in the early 1980's and the performance of small cap unit trusts
have suffered accordingly.
Against this background, Pennystocks performed well relative to the small
cap and micro cap unit trusts, beating all but one of the 14 unit trusts
against which Pennystocks could be compared over the period. These 14 unit
trusts averaged a fall of 36%. Pennystocks had the advantage over these unit
trusts of being able to go more heavily into cash in a falling market. As a
result of all the above, the net asset value per share of Pennystocks fell
by 19% to 183 cents. In contrast, the share price per share of Pennystocks
rose by 7% from 140 cents to 150 cents as the discount to net asset value
narrowed during the period.
Accounting policy
The accounting policies and methods of computation are consistent with those
applied in the most recent annual financial statements.
Subsequent events
During December 2000, African Harvest Capital (Pty) Limited ("AHC") acquired
PS Asset Management (Pty) Ltd ("PSAM"), the company which manages
Pennystocks' portfolio. During April 2001, Alan McConnochie tendered his
resignation from PSAM and staff of AHC took over the management of the
portfolio. African Harvest Limited has acquired in exccess of 35% of the
voting shares in Pennystocks and is in the process of making an offer to
shareholders to purchase their shares at 165 cents per share. Documentation
containing the full details of the offer to shareholders is in the process
of preparation and will be posted to shareholders shortly. The future
direction of Pennystocks depends on the level of acceptance of this offer.
A E McConnochie R L Hendricks
Chairman Director
