| Tue 5 Feb 2002, 0:00 | | Appleton Limited - Interim Results For The Period |
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APPLETON LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/004031/06)
("Appleton" or "the Company") Share Code: ALE ISIN: ZAE000027488
Interim Results For The Period
Ended 31 December 2001
- International Assets under Management exceed US$276 million
- Total Assets under Management increase by 33% to R5,2 billion
- Headline earnings increase by 43,5% to R8,9 million
Group balance sheets
Unaudited Unaudited Audited
as at as at Year Ended
31 Dec 2001 31 Dec 2000 30 June 2001
R'000 R'000 R'000
ASSETS
Non-current assets 65 932 50 537 52 202
Property and equipment 28 790 28 846 26 168
Loans receivable 6 093 3 064 2 866
Investments 22 623 7 248 11 816
Goodwill and intangible asset 6 715 11 379 9 048
Deferred taxation 1 711 - 2 304
Current assets 98 352 119 392 114 905
Accounts receivable 64 091 77 326 73 007
Cash resources 34 261 42 066 41 898
Total assets 164 284 169 929 167 107
EQUITIES AND LIABILITIES
Capital and reserves 94 911 88 582 90 344
Outside shareholders' interest 13 345 8 504 12 275
Long-term loans 6 897 10 612 8 010
Current liabilities 49 131 62 231 56 478
Total equity and liabilities 164 284 169 929 167 107
Abridged group cash flow statements
Unaudited Six Unaudited Six Audited Sixteen
Months Ended Months Ended Months Ended
31 Dec 2001 31 Dec 2000 30 June 2001
R'000 R'000 R'000
Net cash inflows from
operating activities and effect
of exchange rate changes on
cash and cash equivalents 6 466 35 869 43 647
Net cash outflows from
investing activities (13 739) (94 605) (95 571)
Cash flows from financing
activities (364) 99 245 92 265
Net (decrease)/increase in cash
and cash equivalents (7 637) 40 509 40 341
Cash and cash equivalents at
beginning of the period 41 898 1 557 1 557
Cash and cash equivalents at
end of the period 34 261 42 066 41 898
Group income statements
Unaudited Six Unaudited Six Audited Sixteen
Months Ended Months Ended Months Ended
31 Dec 2001 31 Dec 2000 30 June 2001
R'000 R'000 R'000
Gross revenue 73 183 59 763 146 133
Operating income 13 050 8 816 16 625
Finance costs (1 972) (3 459) (2 659)
Income before taxation 11 078 5 357 13 966
Taxation (3 342) (897) 213
Net income after tax 7 736 4 460 14 179
Income/(loss) from associate 3 (82) 54
Attributable to outside
shareholders (1 069) (330) (2 290)
Net attributable earnings 6 670 4 048 11 943
Number of shares
in issue ('000) 1 088 902 1 144 000 1 096 538
Weighted average number of
shares in issue ('000) 1 092 071 1 144 000 895 002
Earnings per share
- Basic (cents) 0,61 0,35 1,33
- Headline (cents) 0,82 0,55 1,49
NAV per share (cents) 8,72 7,74 8,24
Reconciliation of headline earnings
Unaudited Six Unaudited Six Audited Sixteen
Months Ended Months Ended Months Ended
31 Dec 2001 31 Dec 2000 30 June 2001
R'000 R'000 R'000
Net attributable earnings 6 670 4 048 11 943
Amortisation of goodwill 2 195 2 195 4 391
Retrenchment costs - - 1 160
Fair value adjustment - - (4 134
Headline earnings 8 865 6 243 13 360
Condensed statement of changes in shareholders' funds
Unaudited Six Months Ended 31 December 2001
Share Capital Non- Reverse
And distributable Takeover Retained
Premium Reserves Adjustments Income
R'000 R'000 R'000 R'000
Balance at 30 June 2001 134 003 (430) (76 116) 32 887
Dividend paid (3 280)
Reverse takeover adjustment (1 934)
Foreign currency translation
reserve 3 776
Treasury stock held by
subsidiary (665)
Net attributable earnings 6 670
Balance at 31 December 2001 133 338 3 346 (78 050) 36 277
NOTE
The financial statements of Appleton have been prepared in accordance with
AC127: Interim Financial Reporting, and the accounting policies applied in
preparing these interim financial statements are consistent with those set
out in the financial statements for the year ended 30 June 2001. At the
time of the release of last year's interim results, the directors had
proposed writing off goodwill resulting from the U-Trade and RAD AFC
transaction concluded with effect from 1 July 2000, in one year. However,
in accordance with GAAP, the goodwill write off period was subsequently
amended to three years prior to the release of the results for the period
ended 30 June 2001. Accordingly, Appleton's previous year's interim results
have been restated as recommended by AC 127. The acquisition of U-Trade and
RAD AFC has been accounted for as a reverse takeover transaction as required
by AC 131
Comment
Appleton is pleased to announce an increase in headline earnings of 43,5%
from R6,2 million to R8,9 million for the interim period ended 31 December
2001.
Group profile
Appleton has three primary divisions, which are illustrated as follows:
APPLETON LIMITED
Appleton International Appleton Asset Management
Asset Management and Investment Services Appleton Securities
(South Africa)
Appleton International Asset Management focuses as a Global Multi Management
and Trading Advisor fund management business with offices in London, Dublin
and Guernsey. Clients' assets under management currently exceed US$276
million (R3,3 billion).
Appleton Asset Management and Investment Services (South Africa): The asset
management team currently manage R1,9 billion of assets for institutional,
retail and private clients. Investment Services provides financial planning
and fiduciary services to predominantly private clients.
Appleton Securities is a fully integrated stockbroking business, providing
traditional and online stockbroking and corporate broking services to
private and institutional clients. Additional activities include arbitrage,
proprietary trading, corporate finance and JSE sponsor services.
Operational review
The period under review was characterised by a global economic downturn, a
significant depreciation in the value of the Rand and volatile financial
markets both locally and internationally. Appleton's strategy of
diversifying its business internationally, provided the company with a
valuable Rand hedge and resulted in foreign exchange gains of R8,1 million
during the period. The company is pleased to report improved headline
earnings per share of 0,82 cents in a difficult operating environment.
Segmental analysis of headline earnings
R'000 %
Appleton International Asset Management 2 289 31
Appleton Asset Management and Investment Services
(South Africa) 2 934 40
Appleton Securities 2 140 29
Operational earnings 7 363 100
Unrealised foreign exchange gains 8 425
Group infrastructure costs (6 923)
Headline earnings 8 865
Internationally, Appleton manages in excess of US$276 million out of its
Guernsey, Dublin and London offices. Appleton London was awarded an IMRO
license at the beginning of the current financial year and has successfully
managed to tap into distribution channels in the Far East and European
markets, based on the top quartile performance that several of Appleton's
Guernsey registered funds have achieved since inception in 1997. The
company's strategy of using alternative strategies as a fourth asset class,
has enabled it to deliver positive real returns for their clients,
notwithstanding the turbulent global financial markets that prevailed during
the period.
The management of Appleton Capital Management (Dublin) achieved their two-
year profit warranties and accordingly Appleton's interest in the Dublin
business declined from 80% to 70% as required in terms of the original
acquisition agreement. Cash resources of R9 million were utilised to seed a
new fund within the Dublin operation during the period, resulting in a large
increase in the investments reflected on the Group balance sheet. During
January 2002, the liquidity for one of the Dublin funds was reduced and as a
result it was no longer possible to achieve the return profile that the fund
set out to achieve. Accordingly, the institutional client invested in this
specific strategy withdrew their funds (approximately US$50 million), during
January 2002.
Appleton's international operations generate annuity income in the form of
asset management fees and also have the ability to earn performance fees.
The local asset management operation generates annuity income from the asset
management fees, which are received monthly based on the R1,9 billion of
assets managed on behalf of third parties (R448 million represents
institutional assets). The period also saw the launch of two new unit trust
funds, namely the Appleton Prudential Fund of Funds and the Appleton Macro
Active Fund of Funds. Combined assets in these two funds already exceed R70
million.
The Securities operation is highly geared to the market activity on the JSE.
This, together with the requirement to invest further capital into the
business as a result of the implementation of STRATE, has reduced the
profitability of this division.
Appleton has spent considerable resources in establishing an infrastructure
to support its growing and expected future assets under management. Group
infrastructure costs include information technology, marketing, human
resources, compliance and finance expenditure.
Assets under management
Third party assets under management at the end of the period amounted to
R5,2 billion (June 2001 R3,9 billion). Assets managed on behalf of South
African clients locally represent R1,9 billion (June 2001 R1,8 billion)
while assets under management internationally total R3,3 billion (63% of
total assets under management). International assets under management have
shown particularly good growth increasing from US$260 million in June 2001
to US$276 million at the end of December 2001. The overall growth in assets
under management is particularly pleasing and is consistent with the company
strategy of increasing its assets under management to R10 billion by the end
of June 2004.
Board of directors
Mr Deon de Klerk, a commercial law partner of Sonnenberg, Hoffmann &
Galombik Inc, was appointed as a non-executive director of Appleton with
effect from 20 November 2001. This appointment significantly strengthens the
Board of Directors. It is Appleton's intention to appoint additional non-
executive Directors in the near future.
Dividends
Appleton's policy is to declare a single annual dividend at the end of each
financial year. A dividend of R3,3 million (0,3 cents per share) in respect
of the financial year ended June 2001, was paid to shareholders during
September 2001.
Prospects
Appleton will continue to follow its strategy of growing assets under
management. Efforts and resources will continue to be directed into the
expansion of the Group's offshore operations.
On behalf of the Board
C HULTZER
Chairman
Cape Town
5 February 2001
Directors: C Hultzer (Chairman)*, S M Campbell, D De Klerk*, A H Diem, W
Rosenberg, S D Shane, D B Sneddon. *non-executive
Group Secretary: D G Hunter
Registered office: T.A.G House, Alphen Park, Constantia Road, Constantia,
7806
Appleton offices: Cape Town, Dublin, Durban, Johannesburg, Guernsey, London,
Port Elizabeth
Transfer Secretaries: Mercantile Registrars Ltd, 10th Floor, 11 Diagonal
Street, Johannesburg, 2001
Web-site address: www.appleton.com
