| Tue 26 Feb 2002, 0:00 | | Unaudited Interim Results For Lyons Financial Solu |
|
LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED
(Formerly The Learning Corporation Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/022117/06)
Share Code: LYS ISIN: ZAE 000024709
("LFSH LTD")
UNAUDITED INTERIM RESULTS
group income statement
for the 6 months ended 30 November 2001
LFSH LTD LFSH LTD LFSH LTD
CONSOLIDATED CONSOLIDATED CONSOLIDATED
@ 30 Nov 2001 @ 31 May 2001 @ 31 Dec 2000
(6 months) (17 months) (12 months)
Notes R`000's R`000's R`000's
Fee income 1 14,556 47,426 30,507
Interest received 20 35 1
Interest paid (101) (1,314) (928)
Depreciation (92) (251) (177)
Net amortisation
of goodwill 2 (164)
Other operating
costs (8,714) (25,427) (14,946)
Net profit
before taxation 5,505 20,469 14,457
Taxation 1,701 6,297 4,660
Net profit
after taxation 3,804 14,172 9,797
Share of
associate company
attibutable
earnings 1 2,570 - -
Attributable
earnings 6,374 14,172 9,797
EPS CALCS. 3
Shares in issue 380,419,350 335,800,707 327,960,000
Earnings per
share (cents) 1.68 4.22 2.99
Headline earnings
per share (cents) 1.72 4.22 2.99
Annualised
growth (%) 19%
EBITDA Calculation
(R`000's) 9,513 21,999 15,561
Annualised growth (%) 23%
group statements of changes in equity
Non-
Share Share distributable Retained
capital premium reserve income Total
R`000's R`000's R`000's R`000's R`000's
Balance
@ 31 December
1999 34 2,350 (747) 1,637
Listing costs
@ 31 May 2000
written off (2,036) (2,036)
Net surplus
on sale of
Cape Town
and Durban
businesses 1,333 1,333
Net profit 14,172 14,172
Balance
@ 31 May 2001 34 314 1,333 13,425 15,106
Additional costs
re sale of
Cape Town
and Durban
businesses (33) (33)
Issue of shares
to acquire
businesses 5 4,757 4,762
Net profit 6,374 6,374
Balance
@ 30 November
2001 39 5,071 1,300 19,799 26,209
abridged group balance sheet
for the 6 months ended 30 November 2001
30 Nov 31 May 31 Dec
2001 2001 2000
Notes R`000's R`000's R`000's
ASSETS
Non-current assets
Property,
plant and
equipment 624 333 456
Investment in
associate company 1 17,091 - -
Other investments 1,460 827 403
Goodwill 2 6,549 - -
Total non-current
assets 25,724 1,160 859
Current assets 11,751 24,047 22,103
Total assets 37,475 25,207 22,962
EQUITY AND LIABILITIES
Capital and reserves 26,209 15,106 9,084
LIABILITIES
Non-current liabilities 65 84 58
Current liabilities 11,201 10,017 13,820
Total liabilities 11,266 10,101 13,878
Total equity and
liabilities 37,475 25,207 22,962
NET ASSET VALUE
per share (cents) 6.89 4.50 2.77
abridged group cash flow statements
for the 6 months ended 30 November 2001
30 Nov 2001 31 May 2001 31 Dec 2000
(6 months) (17 months) (12 months)
R`000's R`000's R`000's
Operating activities 11,610 1,706 (4,955)
Investing activities (7,327) (1,479) (5,175)
Financing activities (19) 124 5,058
Movement in cash and
short term funds 4,264 351 (5,072)
Opening cash and
short term funds 1,443 1,092 1,092
Closing cash and
short term funds 5,707 1,443 (3,980)
notes to the abridged group financial statements
Period ended 30 November 2001
Note 1 Investment in associate company R`000's
Lyons Corporate Lease Fund ("the fund")
Initial cost of investment 11,000
Movements during the period 11,199
22,199
Less: net negative goodwill arising on additional
value created in "the fund" through the
investment of Cape Of Good Hope Bank Ltd. (5,108)
Closing balance 17,091
During the period under review your group subscribed for 45% of the ordinary
share capital 'the fund' for a total consideration of R11 million. This
shareholding, together with the commensurate directors board appointments of
some of your group's directors ensured the group exercised significant
influence over the decision making process of 'the fund'. In line with this
influence the group secured a long-term asset management contract over the
property assets controlled by 'the fund'. All fees earned in terms of the
asset management contract have been included in net profit in the income
statement whilst the group has equity accounted its share of the earnings of
'the fund' in terms of GAAP. In the previous accounting period your group
charged investment management fees to 'the fund' rather than accounting for
the growth in 'the fund' in terms of AC110. Accordingly for the period under
review the substance of the Income Statement has changed to reflect the
share of the associate company earnings rather than investment management
fees earned.
In line with the groups strategy to continue to build a 'world-class' asset
management company your directors have decided to reduce its shareholding in
'the fund' to 10% over the next 12 months. This will be done by expanding
the shareholder base of 'the fund' to include other financial institutions
as well as blue-chip corporate clients that share the vision of 'the fund'.
This should ensure the realization by your group of some cash from its
investment whilst simultaneously increasing the assets under management of
the group.
Note 2 Goodwill
Arising on acquisition of businesses
over the period 6,870
Less: amortised through the income statement (321)
6,549
Note 3 Headline earnings and earnings per share
Attributable earnings after tax utilised
in calculating earnings per share 6,374
Add: amortisation of goodwill 164
6,538
Earnings per share and headline earnings
per share have been calculated using
380 419 350 ordinary shares in issue for the
full six (6) month period under review.
operational review and prospects
Asset and investment management has continued to grow organically and a
number of major client contracts have been secured during the period under
review including the Department of Public Works, Roads and Transport Gauteng
and six new corporate accounts. The product base of the company has been
increased from a financial engineering point of view to include products
such as real estate synthetic derivatives and securitised debt instruments.
We expect these new products to benefit results during the balance of the
current reporting period.
GARRY FROMENTIN
CHIEF EXECUTIVE
IAN HEWETT
CHIEF FINANCIAL OFFICER
25 February 2002
communication
Lyons Place, 10 Benmore Road
Morningside, Sandton, South Africa
P O Box 87621, Houghton, 2041
Tel: (+2711) 324 2000 Fax: (+2711) 324 2001
e-mail: enquiries@lyons.co.za
www.lyons.co.za
in association with
Aberdeen
PROPERTY INVESTORS INTERNATIONAL
Directors
M Judin* (chairman), G Fromentin**(Chief Executive), I Hewett (chief
financial officer), M Kretzmer (group managing director), dr V Sibiya*, D
Seaton, K Modise*
*Non-executive **British
engineered thought
www.lyons.co.za
Lyons Financial Solutions Holdings Limited
Press Release
Strong cash flows and higher margins helped Lyons Financial Solutions
Holdings turn in another strong set of results for the six months to 30
November 2001.
A notable feature of the interim results is the strong rise in profitability
following the sale of its low-margin, high turnover property broking
business last year.
It produced attributable earnings of R6,37-million on fee income of R14.55
million, a margin of 44%, against a 30% margin on fee income of R47,4-
million for the 17 months to 31 May 2001. More than one fifth of this R47-
million was from broking services, which have since been sold.
Headline earnings per share grew by an annualised 19% to 1.72c, and earnings
before interest, tax, depreciation and amortisation (EBITDA) by an
annualised 23% to R9,5-million for the six month period under review.
Another notable feature of the results was the R11,6-million in cash
generated from operating activities over the six month period, nearly seven
times the R1,7-million generated over the entire 17 months to 31 May 2001.
Chief executive Garry Fromentin says the quantum improvement in cash
generation is the result of a 50% growth to R4,5-billion in assets under
management - with new clients being added every month - and continued
growth in annuity income streams. "Unlike conventional asset managers who
charge a flat fee for the size of assets under management, we have to work
for our fees by adding value to our clients' property portfolios. It's not
just a question of growing the size of asset under management. We have to
show improved returns on these assets."
Some 80% of Lyons' fee income is annuity-based: 40% comes from regular
monthly fees, the balance from performance-based fees.
The R4,5-billion in assets under management is a fraction of the market
potential, says chief financial officer, Ian Hewett. "We estimate the
corporate and institutional property portfolios in SA at about R60-billion
each, with a further R150-billion in the public sector. We are just
scratching the surface."
The group earned R2,5-million from its 45% share in the Lyons Corporate
Lease Fund, a fund with R275-million in property assets under management,
with deals in progress to take it to a critical mass of R700.0 Million. The
fund was created to provide innovative off balance sheet financial
structures for corporate clients. Lyons Corporate Lease Fund will be
separately listed on the JSE later this year.
The lion's share of fee income was generated in Lyons Asset Management, with
Lyons Capital and Asset Finance and Lyons Corporate Services also making
sizable contributions. Lyons Asset Management, the traditional backbone of
the business, signed on several major new clients during the reporting
period, including the Gauteng Department of Public Works. Other clients
include Clover, Ericsson, MGX, Nestle, Chemserve, Unilever, 3M, Proctor &
Gamble, Aspen, and Plascon.
Property asset management is a relatively new concept in South Africa and
differs from traditional property management in that it does not depend on
ownership of fixed property, or the performance of traditional property
administrator functions.
Property asset management is an established and fast growing business
internationally, but is relatively undeveloped in SA. The business concept
is consistent with the trend towards the outsourcing of non-core business
functions such as treasury, transport and IT. It treats property as an asset
class in its own right and seeks ways to unlock value in client property
portfolios which, says Fromentin, are usually the most neglected and under-
performing assets on company balance sheets.
Growing the size of assets under management is not a primary business goal:
"We want to assist clients in improving their return on assets and this
often requires a reduction in the size of their property portfolios," says
Fromentin.
Lyons was the first property asset management company to list on the JSE
when it reversed into the TLC shell on 31 May 2000. It is listed on the
JSE's Financial Services sector.
Looking forward, Fromentin says the group should maintain its current growth
rate for the next two to three years. "We are entering a new growth phase,
and have several innovations in the pipeline which will, for example, allow
clients to diversify property holdings through derivative structures which
allow them to earn revenue streams from property, without owning the
physical assets. Corporate clients are responding to our message that
property needs a dedicated and specialist asset manager. The business
pipeline going forward is very strong."
ABOUT LYONS:
Lyons comprises three distinct businesses:
- Lyons Asset Management, focusing on property asset management and
consulting to the corporate market. A strategic alliance was formed with
Aberdeen, a FTSE-listed investment and asset management house with Euros 8-
billion under management, to service state, parastatal and institutional
clients;
- Lyons Capital and Asset Finance, which focuses on providing cost-effective
financial solutions for moveable assets through the "cost in use" concept.
This allows clients to pay for the use of non-core assets, without the
associated costs of ownership.
- Lyons Corporate Services, a niched business focusing on financial
administration outsourcing and balance sheet restructuring.
POST-REPORTING PERIOD ACQUISITION
Post the reporting period, Lyons announced the acquisition of:
- Donne Investments, a treasury business specialising in structured finance,
securitisation, debt origination and asset management. Lyons paid R4,9-
million in cash and shares for this business, which has been merged with
Lyons Asset Management.
This acquisition will have a positive effect on earnings per share and cash
flow.
ends
Monday, February 25, 2002
Issued on behalf of: Lyons Financial Solutions Holdings Ltd
By : Manning Selvage & Lee
Contact : Garry Fromentin Contact: Louise Levin
Tel : (011) 324 2000 Tel : (011) 235 4487
Fax : (011) 324 2001 Fax : (011) 235 4301
Cellular : 083 459 0233
