| Thu 8 Nov 2001, 0:00 | | Wiphold - Interim Results |
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Women Investment Portfolio Holdings
(Registration number 1996/001291/06)
(Incorporated in the Republic of South Africa)
Share code WPH ISIN ZAE000017752
("WIPHOLD" or "the Group")
INTERIM RESULTS
for the six months ended 31 August 2001
GROUP INCOME STATEMENTS
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Fee income 3 118 19 039 29 028
Gains from disposal and
revaluation of investment securities 8 224 35 220 32 077
Write-down in value of investment loans - - (6 149)
Net profit/(loss) from bond broking
and trading activities 923 - (785)
Income from operations 12 265 54 259 54 171
Interest received 9 609 11 310 22 087
Dividends received 13 647 15 942 24 535
Total income 35 521 81 511 100 793
Interest paid (139) - (9)
Other income/(loss) (5) - 120
Staff costs (12 169) (14 821) (30 202)
Depreciation (813) (531) (982)
Other operating expenses (10 416) (6 780) (16 307)
Profit before amortisation 11 979 59 379 53 413
Amortisation of intangibles (9 607) (7 817) (16 718)
Write-down in value of associate - - (2 597)
Profit before taxation 2 372 51 562 34 098
Taxation 48 (4 306) (2 308)
Net profit after taxation 2 420 47 256 31 790
Net loss from associates (213) (972) (966)
Net profit for period 2 207 46 284 30 824
Earnings per share (cents):
Basic 1,8 35,7 24,3
Adjusted for:
Amortisation of goodwill 4,7 3,4 7,9
Profit on disposal of investments (6,6) (29,6) (29,3)
Headline (0,1) 9,5 2,9
GROUP BALANCE SHEETS
Unaudited Unaudited Audited
at at at
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
ASSETS
Non-current assets
Intangible assets 43 676 52 541 52 857
Fixed assets 5 191 3 626 5 568
Deferred tax assets 4 948 - 3 883
Associate companies 52 473 20 705 18 113
Investment securities 620 182 703 591 645 108
Loans to non-group companies 9 177 - 20 879
735 647 780 463 746 408
Current assets
Trading securities 2 068 - 12 057
Trade and other receivables 8 793 15 995 37 501
Cash and cash equivalents 138 863 192 141 189 516
149 724 208 136 239 074
885 371 988 599 985 482
EQUITY AND LIABILITIES
Issued capital 557 119 554 929 557 119
Reserves 122 587 198 604 171 267
679 706 753 533 728 386
Minority interest 193 730 178 228 181 600
Non-current liabilities
Non-interest bearing borrowings 2 544 1 777 1 774
Deferred tax liability - - 10
Investment securities - 30 124 28 650
2 544 31 901 30 434
Current liabilities
Trading securities - - 12 761
Trade and other payables 2 117 12 197 26 126
Taxation payable 7 274 12 740 6 175
9 391 24 937 45 062
885 371 988 599 985 482
GROUP STATEMENTS OF CHANGES IN EQUITY
Revalu- Accumulated
Share Share ation profit/
capital premium reserve (loss) Total
R'000 R'000 R'000 R'000 R'000
Balance at
29 February 2000 - 660 282 186 588 (736) 846 134
Net profit for year 30 824 30 824
Preference dividend
paid by subsidiary (1 916) (1 916)
WIPHOLD shares
held by a subsidiary company (26 178) (26 178)
Issue of B ordinary shares - 6 208 6 208
Cash distribution (83 193) (83 193)
Surplus on revaluation
of listed and unlisted
investments 4 887 4 887
Transfer from reserves
on disposal of investments (48 380) (48 380)
Balance at 28 February 2001 - 557 119 143 095 28 172 728 386
Net profit for the six months
ended 31 August 2 207 2 207
Preference dividend paid
by subsidiary (1 537) (1 537)
Deficit on revaluation
of investments (43 245) (43 245)
Transfer from reserve on
disposal of investments (6 105) (6 105)
Balance at 31 August 2001 - 557 119 93 745 28 842 679 706
GROUP CASH FLOW STATEMENTS
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Cash flow from operations 5 036 12 783 4 415
Cash flow from investing activities (56 459) 66 981 70 538
Cash flow from financing activities 770 (79 174) (76 988)
Net increase/(decrease) in cash
and cash equivalents (50 653) 590 (2 035)
Cash and cash equivalents at
beginning of period 189 516 191 551 191 551
Cash and cash equivalents at
end of period 138 863 192 141 189 516
INTRODUCTION
WIPHOLD's strategy to restructure its operations from those of an investment
holding company into an operational financial services business remains
unchanged and the Group is committed to playing a significant role in
creating one of the country's leading empowerment-profiled financial
services businesses. Efforts are ongoing to pursue opportunities that are
synergistic with the existing operational activities of the Group, will
unlock value and have a strong empowerment appeal.
In July 2001 WIPHOLD made a strategic acquisition by purchasing a 25% stake
for R35 million in Phaphama Holdings (Pty) Ltd ("Phaphama") which owns an
effective controlling stake in New Africa Investments Limited.
The stake in Phaphama has been accounted for as an investment in an
associate company owing to the significant influence WIPHOLD has over the
operations of Phaphama. The goodwill arising on acquisition will be
amortised over five years, the period during which WIPHOLD can reasonably
expect its influence over Phaphama to assist with the implementation of its
financial services strategy.
As part of the Group's restructuring efforts, the asset management
investment, WIPAM, was sold for cash in September 2001 for its carrying
value.
WIPHOLD remains committed to achieving its restructuring initiatives, and
thereby unlocking value for shareholders, by April 2002.
MANAGEMENT
During the period Dolly Mokgatle was appointed as Non-executive Group
Chairman. Gloria Tomatoe Serobe has joined the Group in an executive
capacity as Chief Executive Officer of Wipcapital and Kobus Viljoen is now
driving certain strategic initiatives that Wipcapital is exploring. Andile
Nyhonyha has been appointed head of Corporate Finance and Graeme Stephens,
while remaining a committed member of the Corporate Finance team, is freed
up to focus on the WIPHOLD strategy. Further appointments of black
professionals to senior positions are envisaged in line with the Group's
commitment to empowerment at all levels.
PORTFOLIO COMPOSITION
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Listed investments
Alexander Forbes Ltd 254 129 291 092 277 961
OSI Ltd - 4 902 -
Bidvest Ltd 3 221 33 243 4 700
Unihold Technology Ltd 377 - 393
257 727 329 237 283 054
Unlisted investments and loans
Afrisun Leisure Investments (Pty) Ltd 10 822 6 159 8 135
Brait Technology & Innovation Fund I 8 227 6 135 6 478
Ericsson SA (Pty) Ltd 10 060 10 060 10 060
Infrastructure Finance Corporation Ltd 14 630 14 630 14 630
Rubico Holdings (Pty) Ltd 19 196 6 542 6 542
Preference Shares 100 000 100 000 100 000
Zonwabise Ltd 4 185 - 4 185
WIP PE Fund Investments 1 440 - -
Clidet No 318 165 - -
168 725 143 526 150 030
Trading portfolio 2 068 (100) (704)
Associate companies 52 473 20 705 18 113
Loans 9 177 20 858 20 879
Cash and money market deposits 138 863 192 100 189 516
Other net assets 50 673 47 225 67 498
Total net asset value 679 706 753 551 728 386
INVESTMENT RETURNS
31 August 28 February
2001 2001 Change
cps cps (%)
WIPHOLD net asset value ("NAV") 543 582 (6,7)
WIPHOLD share price 334 355 (5,9)
JSE Financial & Industrial Index (3,2)
FINANCIAL REVIEW
WIPHOLD reported a net profit of R2,2 million for the six months ended 31
August 2001. Income for the period totalled R35,5 million, including R12,3
million income from operations and R23,2 million interest and dividend
income. The previous period's income included R48,4 million profit from the
disposal of the investment in Africa Bank Investments Limited. This level
and nature of profit has not been repeated in the current period.
NAV, including intangible assets, reduced by 39 cents from 582 cents to
543 cents per share primarily as a consequence of a decline in the value of
WIPHOLD's listed investments.
Earnings per share of 1,8 cents and headline earnings per share of (0,1)
cent are calculated on a weighted average number of shares in issue for the
period of 125 192 689.
The interim period was characterised by increasingly tough trading
conditions, weakening equity and investment markets and changes to the
regulatory environment, which in some cases has led to a postponement of
commissioned mandates. The general market slowdown impacted on the public
sector delaying major transactions until the next calendar year.
The ongoing focus on rationalisation of the Group's listed portfolio has
progressed well. The disposal of the Alexander Forbes investment received
shareholder approval and the investment is now free for exit without
penalty. The Bidvest shares resulting from the Holdbid leveraged investment
structure were disposed during the period for a realised profit of R8,3
million. The remaining investment in Bidvest expires in November 2001, but
due to the leveraged structure of the investment and current market
conditions, WIPHOLD may not realise any value from this stake.
Indicative valuations of the Group's unlisted investments in Africa on
Air and the Brait Technology and Innovation Fund were obtained to assist
management with their future disposal. A mandate has been given for the
disposal of the investment in Rubico. The investments in Ericsson and
Afrisun Leisure will be retained, as will the investment in the
Infrastructure Finance Corporation, which offers synergies with Wipcapital.
Costs have risen by 5,7% over those in the equivalent period last year.
OPERATIONAL REVIEW
Wipcapital has enhanced its strong market profile and presence and
entrenched its reputation in the private and public sectors.
Difficult market conditions have been compounded by regulatory changes
and an extended period of low domestic corporate and parastatal activity.
While the advisory business pipeline is healthy, the postponement until the
next calendar year of a number of mandates impacted substantially on fee
income, limiting it to R3 million for the six months.
Wipcapital has recently added a structured products advisory capability
to its service offering.
Over the past year Wipcapital focused on the development of the
specialised funds management business. The Wipprivate Equity Fund, a joint
venture with RMB Ventures, has been very successful in securing attractive
deal flow and it is anticipated that the initial fund (R120 million) will be
fully invested within the next year. Initiatives are currently underway to
raise a second fund. Wipcapital continues to explore various opportunities
to accelerate its presence in the specialised funds management business.
The 49% held empowerment profiled stock broking firm Legae Securities
(Pty) Ltd ("Legae") has delivered an improved performance over this period.
Through its ability to provide niche research to the institutional
investment community, Legae is able to add value to its clients.
Wipcapital's unique combination of excellence and empowerment will ensure
that it becomes the niche financial player of choice in South Africa, with
its size allowing for the consistent provision of highly targeted services
and strong personalised focus.
EMPOWERMENT
WIPHOLD continues to embrace empowerment at a shareholder level, at an
employee level and at a procurement level. Empowerment at all levels
constitutes a critical factor for the Group to demonstrate its commitment
towards providing previously disadvantaged people with the opportunity to
participate in the economy.
At an employee level, WIPHOLD's professional staff composition is 51%
black and 40% female. Overall staff levels are 50% black and 55% female.
ACCOUNTING POLICIES
The Group financial statements are prepared on the historical cost basis
in accordance with South African statements of Generally Accepted Accounting
Practice. The bases of preparation of the financial statements are
consistent with those applied in the Group's audited financial statements
for the year ended 28 February 2001.
DIVIDENDS
No dividends have been declared to shareholders of WIPHOLD.
COMMITMENTS AND CONTINGENT LIABILITIES
In terms of an agreement between Wipcapital and The Standard Bank of South
Africa Ltd ("SBSA"), Wipcapital has guaranteed cheque marking and overdraft
facilities for Legae with SBSA to the amount of R23 000 000.
WIPHOLD has the following investment commitments:
Unaudited Audited
six months Year
ended ended
31 August 28 February
2001 2001
R'000 R'000
Brait Technology and Innovation Fund I 674 2 422
Afrisun Leisure Investments (Pty) Ltd 3 780 6 467
The group has entered into property rental agreements which commit it to the
following rentals:
Within a year 2 846 2 846
Thereafter 17 558 18 981
SEGMENT INFORMATION
Investments Advisory Other Consolidated
R'000 R'000 R'000 R'000
Unaudited six months ended
31 August 2001
Net profit/(loss) for period 8 995 (4 991) (1 797) 2 207
Audited year ended
28 February 2001
Net profit/(loss) for year 26 005 7 343 (2 524) 30 824
PROSPECTS
The next six months are critical for WIPHOLD as it enters the final phase
of its restructuring. There are a number of strategic initiatives under way
which, if successful, will radically change the nature of the Group and
better position it for the future. In all instances shareholders can
anticipate an unlocking of the discount (to net tangible asset value) at
which the share currently trades.
WIPHOLD remains optimistic that the local economy holds substantial
growth opportunities for it to build on its achievements. The Group remains
committed to its core principles while actively striving towards the
delivery and maximisation of shareholder value.
WIPHOLD believes that the continued implementation of its strategic
repositioning plans will strengthen the Group's drive towards becoming a
fully operational financial services player in the year ahead.
Prospects for the future are positive and the Group is well positioned to
take advantage of any improvements in the economy.
For and on behalf of the board
Dolly Mokgatle (Non-Executive Chairman)
Louisa Mojela (Chief Executive Officer)
Johannesburg
8 November 2001
BOARD OF DIRECTORS
Executive: Louisa Mojela (CEO), Nomhle Canca, Gloria Tomatoe Serobe
Non-executive: Dolly Mokgatle (Chairman), Charmaine Mabuza, Nomsa Mazwai,
Fazila Montsi, Sindi Zilwa
COMPANY SECRETARY
Excelsior Management Services
REGISTERED ADDRESS
61 Central Street, Houghton, 2198
Postnet Suite 169, Private Bag X2600, Houghton 2041
Telephone: (011) 715 3600 Fax: (011) 715 3612
www.wiphold.com
