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VESTACOR LIMITED
Reg No 1996/017285/06
("VESTACOR")
SHARE CODE: VTR
ISIN CODE: ZAE:000018412
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2001
Unaudited Unaudited Audited
ix months six months Year
ended ended ended
31/08/01 31/08/00 2001
notes R'000 R'000 R'000
Revenue 690 2 720 5 343
Other operating income 1 1 938 16 308 4 897
Unrealised profit on
investment 2 36 398 - 99 495
Operating expenses (9 510) (4 184) (16 317)
Profit from operations 29 516 14 844 93 418
Finance costs (72) (299)
Cancellation of option agreement (3 000) (1 520) (1 520)
Income from associates - (5 069) -
Profit before taxation 26 444 8 255 91 599
Taxation (1 838) (2 279) (2 260)
Net profit for the period 24 606 5 976 89 339
Weighted number of shares
in issue (`000) 163 747 163 747 163 747
Earnings per share (cents) 15.0 3.6 54.6
Headline earnings per share
(cents) 15.0 5.0 54.6
BALANCE SHEET
AT 31 AUGUST 2001
31/08/01 31/08/00 28/02/01
notes R'000 R'000 R'000
Assets
Equipment 130 39 906 185
Share option scheme loan 20 301 23 301 23 302
Deferred tax 4 875 28 983 2 558
Investments 3 267 611 49 797 236 579
Negative goodwill - (69 390) -
Inventory - 168 450 -
Receivables 3 061 30 656 5 010
Taxation 280 - 280
Cash & cash equivalents 40 129 75 648 26 447
Total assets 336 387 347 351 294 361
Equity and Liabilities
Capital and reserves 303 890 195 378 279 284
Share capital 16 375 16 375 16 375
Share premium 147 460 147 676 147 460
Non-distributable reserve 64 338 - 59 364
Accumulated profits 75 717 31 327 56 085
Long term liabilities - 7 439 -
Non current liabilities
Deferred tax 8 500 - 4 345
Current liabilities
Payables and provisions 23 997 144 534 10 732
Total equity and liabilities 336 387 347 351 294 361
Number of shares in issue
(`000) 163 747 163 747 163 747
Tangible Net asset value
per share (cents) 186 162 171
Intangible Net asset value
per share (cents) 186 119 171
ABRIDGED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 AUGUST 2001
31/08/01 31/08/00 28/02/01
R'000 R'000 R'000
Cash flows generated by/
(utilised in)
operating activities 8 343 12 501 (3 951)
Cash flows utilised in investing
Activities 5 339 (100 814) (64 063)
Cash flows generated from
financing activities - 70 000 500
Net increase/(decrease) in cash
and cash equivalents 13 682 (18 313) (67 514)
Cash and cash equivalents at
beginning of period 26 447 93 961 93 961
Cash and cash equivalents at
end of period 40 129 75 648 26 447
31/08/01 1/08/00 28/02/01
R'000 R'000 R'000
1. Other operating income
Other operating income includes the following:
- Interest received 571 2 343 2 105
2. Unrealised profit on investments
Moresport 35 359 - 97 207
Fashaf - - (9 870)
Look & Listen 4 974 1 267
Renaissance (1 935) 1 357
Vestacor IT Investments (2 000) (2 000)
DNA - 10 214
Property investments - 1 320
36 398 99 495
3. Summary of investments Percentage Market Carrying
interest Value Value
R'000 R'000
Listed
Fashion Africa 62.3% 27 667 34 631
Retail Investment
Holdings/Richway 25% 12 750 11 919
Renaissance 5.5% 6 921 6 921
DNA - 960 1 333
Other - 66 90
48 364 54 894
Unlisted
Look & Listen 33.8%* 8 000 8 000
Vestacor IT Investments 100.0%* 1 879 1 879
Moresport 100.0%* 201 674 201 674
212 717 212 717
261 081 267 611
* Directors' valuation
Commentary on results
During the past six months Vestacor concluded, as part of its ongoing
strategy, the sale of the majority of its interest in DNA. In addition, the
outstanding conditions for the sale by Renaissance of its bedding and
assembly business to Relyant have been met. Cash proceeds of around
R5million, and Relyant shares valued at some R1.8 million, will be
distributed by Renaissance to Vestacor later this month. After this payment
Vestacor will have some R47million in cash and short term receivables.
Shareholders should take cognisance of the fact that Vestacor's' value and
growth is best evaluated by its net asset value and not by earnings or a
multiple thereof. For the third consecutive period the net asset value per
share of the Company has increased.
The chains that are controlled by the Moresport group; The Pro Shop,
Sportsmans Warehouse, Outdoor Warehouse and Sportshoe World, are trading at
or above budget with market share growth in targeted product areas.
Moresport has been revalued to R201million at 31 August 2001.
Vestacor increased its stake in Fashaf to 62% through the underwriting of
the Fashaf rights issue. In this period an extensive review was undertaken
of the Fashaf business. A strategy to return the business to profitability
and to build on the strengths has been introduced. Whilst this will likely
take some time, management and Vestacor remain confident that the business
will be returned to profitability.
Accounting treatment
As was explained in Vestacor's annual financial statements for the year
ended 28 February 2001 Vestacor accounts for its investments in terms of
AC133. To ensure that the financial statements represent a meaningful
presentation of the business philosophy of Vestacor, investments are not
consolidated nor have the earnings attributable to associate company
investments been equity accounted. Vestacor revalues its investments every
six months with the increase or decrease in value brought to account through
the unrealised profit or loss line in the income statement. The financial
statements for the six months ended 31 August 2000 were presented prior to
the introduction of AC133, for this period, Moresport was therefore
consolidated and earnings attributable to other associate company
investments equity accounted. The accounting policies for the six months
ended 31 August 2001 are consistent with those used for the financial year
ended 28 February 2001.
Report back from major investments
During the past six months Moresport has increased turnover and is trading
in line with its budget. The Pro Shop and Sportsmans Warehouse continue to
dominate their respective market segments. As a result of substantial on the
job training, the skill base of management and staff has been strengthened
in the respective chains. Vestacor is extremely satisfied with the
performance of this business.
In March 2001 Fashaf undertook a rights issue and raised R31million. The
proceeds of the rights issue were deployed to commence a reduction of the
debt in the business. Management has identified that the product offering
within Fashaf needs to be expanded and the product mix changed within
certain stores. These changes to the business are in the process of being
implemented and should be completed by the end of the 2002 calendar year.
Vestacor believes that it is in line with its strategy to turn struggling
businesses around and this remains true for Fashaf. Vestacor has committed
funding to ensure the solvency and liquidity of Fashaf.
Look & Listen increased its store base to 11 stores during the last
financial year. Over the past six months trading has been tough given the
poor state of the retail market generally and the music market in
particular. Nonetheless the business has been able to grow market share over
the last six months. The process of corporatising the business has now been
completed.
Vestacor has entered into an agreement to increase its stake in Retail
Africa from 20% to 100% with effect from 1 October 2001. The purchase
consideration will be settled by the issue of 10 000 000 Vestacor shares.
Retail Africa is tasked with developing an awareness in the retail property
market as well as the identification of retail property investment
opportunities. It has the sole agency to manage and tenant five convenience
shopping centres in South Africa as well as Longbeach and Clearwater
Shopping Centres. The directors of Retail Africa are confident that the
business is fast becoming one of the leading retail development consultants
in this specialised sector of the commercial property market.
As part of its stated strategy during the last six months Richway has
disposed of 8 of its non-core properties. The extensions to Kolonnade and
Northgate have commenced and should be completed by the end of 2001.
Management has been actively involved in ensuring that the profitability of
shopping centres within the portfolio is maximised. Considerable steps have
been taken to reduce vacancies, increase foot-traffic and reduce unnecessary
overheads. The shopping centres should be operating at optimal efficiencies
by the end of Vestacor's financial year.
Management
Mark Nielsen has been appointed as Chief Operating Officer and Darren Levy
as Group Company Secretary.
AB Rubenstein M Nielsen
Chief Executive Officer Chief Operating Officer
Johannesburg
4 September 2001
Directors
GB Rubenstein (Chairman), AB Rubenstein (CEO), M.Nielsen (COO), LG Rapp, JMP
Desmidt*, KG Hodgson*, MJ Kaplan*, JA Mackay, CF Turner*
*non-executive
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