| Fri 11 Jan 2002, 0:00 | | Quyn Holdings Limited |
|
(Incorporated in the Republic of South Africa)
(Registration number 1998/012245/06)
(Share code: QUY ISIN: ZAE000017257)
("Quyn")
Unaudited preliminary group results
for the year ended 30 September 2001
ABRIDGED GROUP BALANCE SHEET
as at 30 September 2001
30 September 30 September
2001 2000
(R000's) Notes (unaudited) (restated)
ASSETS
Non-current assets
Property, equipment and vehicles 39 875 32 786
Inventory 1 11 167 19 037
Goodwill and intangibles (3 722) (3 811)
Investments and loans 2 6 217 6 529
Deferred taxation 3 535 7 973
54 072 62 514
Current assets
Inventory 1 34 412 20 815
Accounts receivable 26 130 45 442
Bank balances and cash equivalents 14 703 12 466
75 245 78 723
Total assets 129 317 141 237
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 2 287 2 287
Reserves 19 468 45 577
21 755 47 864
Outside shareholders' interest - 282
Non-current liabilities
Long-term loans 4, 5 34 828 29 102
Provision for onerous contracts 3 882 4 257
Deferred income 276 1 613
Deferred taxation 53 -
39 039 34 972
Current liabilities
Current portion of
long-term liabilities 4, 5 9 006 1 650
Provision for onerous contracts 375 880
Short-term loans 5 14 197 2 304
Accounts payable 23 632 31 791
Taxation 8 938
Bank overdraft 5 21 305 20 556
68 523 58 119
Total equity and liabilities 129 317 141 237
Net asset value per share (cents) 30,1 66,1
Net tangible asset value per share (cents) 35,2 71,4
Notes to the balance sheet
1. Developed land held for resale to the value of
R44 777 000 (2000: R20 907 000) is encumbered.
2. Investments include listed securities of R181 000 (2000: R181 000) at a
market value of R240 000 (2000: R207 000) and unlisted investments of
R1 000 (2000: R176 000) at directors' valuation of
R208 000 (2000: R176 000).
3. The deferred tax assets have been written-off against income and equity.
4. Liabilities to the value of R40 694 000 (2000: R28 547 000) are secured
by mortgage bonds and/or sureties from the group.
5. Interest bearing debt.
Supplementary information
1. Contingent liabilities totalling R142 million (2000: R243 million) exist
at the balance sheet date.
2. Capital commitments totalling R26 million (2000: R55 million) have been
contracted for but not provided for in the annual financial statements.
ABRIDGED GROUP CASH FLOW STATEMENT
for the year ended 30 September 2001
Year ended Year ended
30 September 30 September
2001 2000
(R000's) (unaudited) (restated)
Cash (utilised) by operating activities (38 872) (34 430)
Investing activities
Proceeds on sale of subsidiaries, net cash forgone (1 730) 2 588
Further loan to Quyn Securities, post-sale - (8 045)
Proceeds from sale of Quyn Martin 19 768 -
Proceeds from sale of property, equipment
and vehicles - 26 201
Acquisition of property, equipment and vehicles (1 825) (15 530)
Increase in loans to joint ventures (1 035) (1 469)
Repayment of loans to joint ventures - 410
Investment in investment property - 7 392
Other 478 (397)
Cash generated by investing activities 15 656 11 150
Financing activities
Increase in long-term loans 18 149 26 394
Long-term loans repaid (5 427) (531)
Increase/(decrease) in short-term borrowings 11 982 (17 581)
Net cash inflow from financing activities 24 704 8 282
Change in cash and cash equivalents 1 488 (14 998)
Cash and cash equivalents
at the beginning of the year (8 090) 6 908
Cash and cash equivalents
at the end of the year (6 602) (8 090)
ABRIDGED GROUP INCOME STATEMENT
for the year ended 30 September 2001
Year ended Year ended
30 September 30 September
2001 2000
(R000's) Notes (unaudited) (restated)
Revenue 89 530 111 332
Operating (loss)/income before interest 1 (4 096) 9 304
Abnormal items 2 (5 882) -
Net interest (paid)/received 3 (9 292) (5 391)
Operating (loss)/income (19 270) 3 913
Exceptional item - profit on sale of
subsidiaries 4 742 24 038
Net (loss)/income before taxation (18 528) 27 951
Taxation (975) (5 538)
(Loss)/income after taxation (19 503) 22 413
Share of associate companies' income (52) (21)
Outside shareholders' interest - (253)
(Loss)/income attributable to ordinary
shareholders (19 555) 22 139
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2001
Year ended Year ended
30 September 30 September
2001 2000
(R000's) Notes (unaudited) (restated)
SHARE CAPITAL
Ordinary share capital
Balance at beginning of period 724 958
Cancellation of shares - (234)
Balance at end of period 724 724
Preference share capital
Balance at beginning of period 54 -
Issue of shares - 54
Balance at end of period 54 54
SHARE PREMIUM
Balance at beginning of period 1 509 10 624
Arising on issue of preference shares - 25 746
Reduction on cancellation of share capital - (27 826)
Write-off of intangible assets - (7 035)
Balance at end of period 1 509 1 509
Total share capital and share premium 2 287 2 287
RESERVES
(Accumulated loss)/retained income
(Loss)/income attributable to ordinary
shareholders (19 555) 22 139
Preference dividends paid - (31)
Transfer to non-distributable reserve 4 (742) (28 261)
Reversal of deferred tax asset 1 449 -
(Accumulated loss) for the period (18 848) (6 153)
Retained income - beginning of period 7 972 14 691
Adjustment in respect of
investment property 566 (566)
(Accumulated loss)/retained income
- end of period (10 310) 7 972
Non-distributable reserves
Balance at beginning of period 37 605 9 290
Revaluation of insurance policy (54) 54
Non-distributable reserve arising on
acquisition of joint venture - 5 550
Deferred tax assets written-off (8 700) -
Foreign currency translation reserve 185 -
Transfer from retained earnings 4 742 28 261
Re-allocation to negative goodwill - (5 550)
Balance at end of period 29 778 37 605
Total reserves 19 468 45 577
Shares in issue
Ordinary shares in issue -
end of period 72 391 134 72 391 134
Ordinary shares in issue -
weighted average 72 391 134 72 391 134
Preference shares in issue -
end of period 5 365 682 5 365 682
(Loss)/earnings per share (cents) 5 (27,0) N/A
Headline (loss)/earnings
per share (cents) 6 (28,0) 1,1
Ordinary dividends per share (cents) - -
Preference dividends per share (cents) - 0,6
Notes to the income statement and statement of changes in equity
1. Net operating income includes:
Depreciation 1 974 2 662
Net (realisation)/amortisation of goodwill 101 831
Impairment losses - 485
2. Write-down of inventory to net realisable
value of R3 658 000 and write-off of deposit
paid on land of R2 224 000.
3. Interest received 3 362 6 025
Interest paid (12 654) (11 416)
4. Profit on sale of Quyn Capital in current year and
Quyn Securities and Quyn Martin in prior year.
Profit transferred to non-distributable reserve.
5. Earnings per share for 2000 is not presented as
earnings include an exceptional item.
6. Headline (loss)/earnings can be reconciled to
attributable (loss)/earnings as follows:
Net (loss)/income (19 555) 22 139
Profit on sale of investments (742) (24 038)
Goodwill and intangibles amortised 480 1 315
Realisation of goodwill (379) -
Write-down of investments - 1 237
(Profit)/loss on sale of property, equipment
and vehicles (35) 111
Headline (loss)/earnings: (20 231) 764
Commentary
REVIEW OF RESULTS
The operating losses and high interest charges reported to shareholders at
31 March 2001 continued into the second half of the year and were further
adversely affected by abnormal write-offs in the property division. The loss
attributable to ordinary shareholders was R19,6 million or 27 cents per
share.
Other than the changes in accounting treatment required by the South
African Statements of Generally Accepted Accounting Practice ("GAAP") and
noted in this report, the unaudited preliminary group results have been
prepared in accordance with the principles applied in prior reporting
periods and in accordance with GAAP. As a result certain comparative figures
have been restated. The results have been reviewed by the auditors KPMG Inc.
and the review report contains reference to the disclosure of the investment
property known as the "Benoni Lakeside Mall" and its related liability and
expresses concern about the ability of the group to continue as a going
concern. These issues are dealt with more fully below. The review report is
available for inspection at the registered office of the company.
Investment property
The directors are of the opinion that the property investment, known as the
"Benoni Lakeside Mall" as well as its related liability, should not be
disclosed on the balance sheet. The subsidiary company's auditors have
indicated that they will issue a qualified audit opinion should the
directors adopt this approach for the audited financial statements. This
property and its related liability have been excluded from the provisional
group balance sheet and the comparative group financial information has been
restated.
It should be noted that the directors of Quyn only became aware in March
2001 that the agreement relating to the acquisition of this property had not
been and could not be fulfilled. Losses relating to this property in excess
of R5,2 million have been incurred by the group in the period subsequent to
the acquisition of Colliers RMS. A settlement agreement relating to this
property was signed subsequent to the financial year-end.
Going concern
The auditors have expressed concern about the ability of the group to
continue as a going concern in the foreseeable future without securing
additional financial support. The liquidity of the group is under pressure
at present due mainly to the demands of the property division and the
funding utilised in establishing the Mozambique operations. Action has been
taken to address both these issues. Proceeds from the sale of properties by
Colliers RMS have already reduced that company's overdraft from R15 million
in June 2001 to R6 million in January 2002. Proceeds of other concluded
sales and those under negotiation will eliminate Colliers RMS's overdraft in
the first half of 2002. The remainder of the Quyn group is cash positive.
With regard to Mozambique, management has concluded negotiations to
restructure the foreign company's debt which will further enhance the
group's cash position. Capital expenditure has been curtailed and steps
including significant retrenchments have been taken to reduce operating
costs in all group companies.
Contingent liabilities
Contingent liabilities for the group have been reduced from R243 million at
the previous year-end to R142 million currently, primarily by the removal of
the R30 million suretyship in respect of "The Point" and the contingent
liabilities relating to the "Benoni Lakeside Mall".
The directors of Quyn Consulting Services (Pty) Ltd have taken both legal
and taxation advice regarding an unsubstantiated notice of estimated
assessment received in respect of employees' taxation. The opinions received
indicate that this notice has no merit and that the company has minimal
exposure in this regard. It is the intention of the directors to approach
the Minister of Finance to establish correct guidelines for the labour-
broking industry, which is a substantial employer of labour locally and
internationally.
Changes in accounting policies
During the year the company changed its accounting policies in respect of
the amortisation of goodwill and the recognition of liabilities for onerous
contracts in order to comply with GAAP. The comparative figures have
accordingly been restated and the effect was to decrease the net loss in
2001 by R1 228 000, decrease the net profit in 2000 by R290 000 and adjust
retained income adversely by R5 149 000 for 1999.
The group's accounting policy for the recognition of revenue from sales
and leases of property has been changed to comply with GAAP. The comparative
figures have accordingly been restated and the effect was to increase the
net loss in 2001 by R1 285 000, decrease the net profit in 2000 by R339 000
and adjust retained income positively by R4 236 000 for 1999.
SEGMENTAL RESULTS
Operating (losses)/income have been incurred by the group's divisions as
follows:
Year ended Year ended
30 September 30 September
2001 2000
(R000's) (unaudited) (restated)
Advisory services 2 150 (5 110)
Property division (15 173) 3 300
Human resources (423) (405)
Holding company (3 462) (2 055)
Foreign operations (2 362) -
Discontinued businesses - 8 183
(19 270) 3 913
Advisory services - The operations of QuynFin have been expanded to provide
financial services to a wider base of clients and the company is now
profitable.
Property division - Operating income before interest for the year was
adversely affected by abnormal items of R5,9 million relating to the
forfeiture of a R2,2 million deposit on "The Point" incurred when obtaining
release from the R30 million suretyship relating to this proposed
development, and by the write-down by R3,7 million of certain properties to
net realisable value. Operating income was further eroded by net finance
costs of R10,9 million attributable largely to previous investments in
developed and undeveloped properties which are now being disposed of. The
exposure to the "Benoni Lakeside Mall" resulted in Colliers RMS accounting
for revenue losses of approximately R1,5 million in the year under review
and R1,8 million in the prior year. This exposure has now been removed.
The financial structures relating to the Colliers premises in
Johannesburg and Durban have resulted in the company paying excessive
rentals during the year under review in the order of R1,7 million. These
rentals are expected to continue into the future and are provided for in the
abridged balance sheet under the heading "provision for onerous contracts".
Human resource services - This division was restructured during the year to
provide a more focused service to its market and incurred certain one-off
restructuring and consolidation costs. The human resource outsourcing
business had a better year whilst the payroll bureau continued to operate
profitably.
The holding company was adversely affected by a provision of R2 million
against a secured debt as a result of a reduction in the value of the
security held.
Foreign operations - The group's investment in Mozambique, whilst being
costly to set up in terms of expenses and cash, is expected to produce
profits in the new financial year. The group has also invested R750 000 in
Zambia to finance an engineering business from which a human resource
outsourcing operation will operate shortly.
INVESTMENTS
The agreement to dispose of the shares in Ikusasa Communications has lapsed.
The group's investment in Quyn Capital was disposed of with effect from 1
October 2000.
PROSPECTS
The year under review has been extremely difficult but with the action taken
to reduce debt and operating expenses and to streamline the operations it is
anticipated that the group will return to profitability in the current
financial year.
DIRECTORS
The Board of the company has been reconstituted with the resignation of Mr R
M Hewitt with effect from 12 November 2001 and the appointment of Messrs J A
Holland and V Schroeder on 13 December 2001.
DIVIDEND
No dividend has been declared for the year under review.
FURTHER CAUTIONARY ANNOUNCEMENT
Further to the cautionary announcement published on 7 December 2001,
shareholders are advised to continue exercising caution in their dealings in
Quyn shares until a further announcement in this regard is made.
For and on behalf of the Board
R P Fertig (Chief Executive Officer)
11 January 2002
DIRECTORS
R P Fertig (Chairman and CEO), J N Alcock, J A Holland, V Schroeder,
J S Wilson (Non-executive), W P Alcock (Alternate).
REGISTERED OFFICE
Arma Park, 27 Bond Street, Ferndale, Randburg
TRANSFER SECRETARIES
Computershare Services Limited,
Edura House,
41 Fox Street, Johannesburg
SPONSOR
KPMG, 85 Empire Road, Parktown, Johannesburg
