| Wed 5 Dec 2001, 0:00 | | Iota Financial Services Limited - Interim Announce |
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Ended
INTERIM ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2001
GROUP PROFILE
IOTA is an investment holding company that focuses on providing a
diversified range of financial services to a select target market of high
net worth individuals and small to medium sized businesses both locally and
offshore. These services include portfolio management and stockbroking,
investment and financial planning, accounting and tax planning, short-term
insurance broking, employee benefits and endowment bond trading.
CHANGES IN GROUP STRUCTURE
As part of the Group's ongoing review of its future direction, the following
entities were disposed of with an effective date of 1 May 2001.
- The short-term insurance business conducted through Compass Insurance was
disposed of to Hannover Re for a cash consideration of some R26,7 million.
The final consideration may be subject to adjustment in respect of
warranties given which expire on 30 April 2002. All conditions precedent in
the disposal agreement have now been fulfilled.
- The property broking, development and management businesses conducted
through Alliance Property Group (based in Kwa-Zulu Natal), and McCreedy
Friedlander (based in Johannesburg and Cape Town) were also disposed of to
the original vendors of these businesses. These disposals are not material
in the context of the Group.
Further to the announcements dated 10 September 2001, the activities of the
asset based operation, IOTA Business Finance no longer conducts any business
with recourse. Considerable efforts are also being made to recover the
outstanding book and thereby limit exposure to the Group going forward.
REVIEW OF RESULTS
Following the profit warning to shareholders published on 10 September 2001
regarding IOTA Business Finance, the Group's trading position has been
negatively affected in this period by the R25 million provision created in
respect of the underlying debtors in that company.
The continuing businesses have performed satisfactorily in this period
reflecting an 11% increase from the prior comparative period. This
performance is commendable given the tightening market conditions that have
been manifesting themselves for a number of months. The loss of R13,4
million on the disposal of investments referred to earlier mainly relates to
Compass Insurance and in addition includes the full and final settlement of
all the litigation issues between the Group and the previous vendors of that
business.
Despite the recognition of the consequences referred to above, the Group
balance sheet remains strong with shareholder funds of R122 million and cash
resources at R57,1 million at the end of the period. Current and gearing
ratios remain well within acceptable industry norms.
CHANGES IN THE BOARD OF DIRECTORS
Michael Gahagan resigned as Chief Executive Officer and director with effect
from 1 September 2001. Jannie Eagar, currently a director of the group and
managing director of International Tank Containers was appointed in his
stead. David Rose, a director of Fisher Hoffman PKF (Jhb) Inc., was
appointed as a non-executive director on 5 October 2001.
DIVIDEND AND PROSPECTS
As the Group continues to assess its future direction and having regard to
the operating results for the half year under review, the directors deem it
prudent to retain cash resources, hence no dividend will be declared at this
time. The remaining core businesses are expected to perform satisfactorily
in the next six months but their prospects are dependent on market
conditions.
FOR AND ON BEHALF OF THE BOARD
PEB REYNOLDS JA EAGAR
Chairman Chief Executive Officer
4 December 2001
IOTA FINANCIAL SERVICES LIMITED
INTERIM ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2001
INCOME STATEMENT
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
R'000 2001 2000 2001
CONTINUING OPERATIONS
Revenue
Turnover 54,270 56,415 111,562
Interest received 6,735 5,011 11,731
Dividends received 188 892 1,920
Surplus on disposal of investment - - 6,213
61,193 62,318 131,426
Expenditure
Net provision against finance agreement
debtors -25,455 -881 -10,209
Operating expenses -40,287 -43,892 -79,956
-65,742 -44,773 -90,165
Operating (loss) / profit -4,549 17,545 41,261
Unrealised profit / (loss) on
trading securities 135 -747 -1,703
Interest paid -6,922 -39 -5,505
(Loss) / income before taxation -11,336 16,759 34,053
Taxation -4,131 -6,344 -10,374
(Loss) / income after taxation -15,467 10,415 23,679
DISCONTINUING OPERATIONS
Revenue
Turnover 58,658 116,279
Interest received 4,527 8,764
Dividends received 236 498
- 63,421 125,541
Expenditure
Net claims incurred -34,569 -76,168
Operating expenses -16,291 -45,672
- -50,860 -121,840
Operating profit - 12,561 3,701
Unrealised (loss) / profit on trading
Securities - -1,343 616
Loss on disposal of subsidiaries -13,408 - -
Interest paid - -1,586 -2,577
(Loss) / income before taxation -13,408 9,632 1,740
Taxation 190 -880 1,109
(Loss) / profit after taxation -13,218 8,752 2,849
Summary of after-tax results
Continuing operations -15,467 10,415 23,679
- loss attributable to asset-based
finance operation -25,971 990 -4,497
- profit of other continuing operations 10,504 9,425 28,176
Discontinuing operations -13,218 8,752 2,849
Total (loss) / profit after taxation -28,685 19,167 26,528
Headline (loss) / earnings -13,209 21,045 31,409
STATISTICS
Number of shares (000's) - net of
treasury shares held
- in issue 55,646 72,760 56,272
- weighted 56,041 72,760 69,343
(Loss) / earnings per share (cents) (51.5) 26.3 38.3
Headline (loss) / earnings per
share (cents) (23.6) 28.9 45.3
Headline earnings reconciliation
(Loss) / profit after taxation -28,685 19,167 26,528
Amortisation of goodwill 2,332 1,913 5,732
Loss on disposal of subsidiaries 13,218
(Profit) / loss on disposal of
goodwill, property, equipment and
vehicles, net of taxation -74 -35 -851
Headline earnings -13,209 21,045 31,409
BALANCE SHEET
Unaudited Unaudited Audited
31 October 31 October 30 April
R'000 2001 2000 2001
ASSETS
Property, equipment and vehicles 52,507 55,112 53,723
Intangible assets 14,710 14,818 16,869
Investments and loans 1,485 30,755 4,157
Finance agreement debtors 15,149 57,383 18,866
Other current assets 111,308 169,344 245,947
Cash and cash equivalents 57,169 126,724 107,854
252,328 454,136 447,416
EQUITY AND LIABILITIES
Shareholders' funds 122,253 173,743 151,385
Interest bearing debt 87,619 140,941 103,754
Interest free liabilities 42,456 139,452 192,277
252,328 454,136 447,416
Net tangible asset value per share (cents) 193.3 218.4 239.0
Net asset value per share (cents) 219.7 238.8 269.0
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 October 31 October 30 April
R'000 2001 2000 2001
Shareholder's funds at beginning of year 151,385 154,576 154,576
Cancellation of shares issued -210 - -16,000
Foreign exchange cover hedging reserve - - -494
Income after taxation -28,685 19,167 26,528
Acquisition of Treasury shares -237 - -13,225
Shareholder's funds at end of year 122,253 173,743 151,385
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
31 October 31 October 30 April
R'000 2001 2000 2001
Cash (utilised in) / generated from
operating activities -26,668 39,835 30,701
Cash (utilised in) / generated from
investment activities -28,517 -51,233 3,166
Cash effects of financing activities 4,500 39,888 -24,247
Net cash (outflow) / inflow -50,685 28,490 9,620
Cash and cash equivalents at beginning
of period 107,854 98,234 98,234
Cash and cash equivalents at end of period 57,169 126,724 107,854
SEGMENTAL ANALYSIS
Segment
Segment headline
R'000 revenue earnings
Six months ended 31 October 2001
Investment and insurance services 36,303 11,856
Consulting 13,009 1,759
Financing products 4,958 -25,971
Treasury and investments - -853
54,270 -13,209
Six months ended 31 October 2000
Investment and insurance services 33,251 15,301
Consulting 16,034 3,648
Financing products 4,669 990
Treasury and investments 1,327 730
Discontinuing operations 59,792 376
115,073 21,045
Year ended 30 April 2001
Investment and insurance services 74,764 26,704
Consulting 29,726 6,100
Financing products 9,006 -4,497
Treasury and investments - 1,938
Discontinuing operations 116,279 1,119
Eliminations -1,931 -
227,841 31,409
NOTES
1. Basis of preparation
The income statement has been separated into continuing and discontinuing
operations. The discontinuing operations comprise Alliance Property Group,
Compass Insurance Company and the Mcreedy Friedlander businesses, which were
disposed of with effect from 1 May 2001. Comparative figures have been
restated accordingly.
2. Accounting policies
The accounting policies used are consistent with those applied in the prior
financial year and comply with South African Statements of Generally
Accepted Accounting Practice.
The unaudited balance sheet at 31 October 2000 has been restated in line
with the change in accounting policy and now recognises discounted asset
based debtors with recourse, and their related funding liabilities.
3. Capital expenditure for the period
New corporate headquarters - 42,640 41,893
Other 1,961 6,788 8,136
4. Additional information
Depreciation 1,611 1,131 3,026
Goodwill amortised 2,332 1,913 5,732
