| Mon 20 May 2002, 0:00 | | M Cubed Holdings Limited: Audited Group Results |
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m Cubed Holdings Limited: Audited group results and dividend declaration
m Cubed Holdings Limited
(previously Escher Group Limited)
Registration number: 1998/014568/06
JSE share code: MCU ISIN: ZAE000033353
Audited group results and dividend declaration
for the year ended 28 February 2002
m Cubed group exceeds forecast
* Headline earnings per share increases by 28% to 9,6 cents
* Operating profit grows 191% to R64 million
* Assets under management increase to R43 billion
* Assets under administration increase to R52 billion
Income Statement for the year ended 28 February 2002
Forecast*
12 months ended
28 February 28 February 28
February
2002 2002 % 2001
R`000 R`000 change R`000
254 501 Net revenue 272 326 102 231
(112 366) Cost of revenue (120 034) (49 869)
142 135 Gross profit 152 292 191 52 362
(82 179) Operating expenses (88 336) 191 (30 355)
59 956 Operating profit before
net finance income 63 956 191 22 007
10 739 Net finance income 8 276 (7) 8 869
70 695 Profit before taxation 72 232 134 30 876
(20 141) Taxation (19 170) 95 (9 813)
50 554 Profit after taxation 53 062 152 21 063
400 Share of profit/(loss) of associates 553 (149)
252 Attributable to outside shareholders 269 597
Headline earnings attributable
51 206 to shareholders 53 884 150 21 511
(15 037) Amortisation of goodwill (12 640) (926)
- Costs arising from merger (4 242) -
- Impairment charge - (421)
36 169 Earnings attributable to shareholders 37 002 84 20 164
562 500 Weighted number of shares
in issue (`000) 562 500 288 534
6,4 Earnings per share (cents) 6,6 7,0
9,1 Headline earnings per share (cents) 9,6 28 7,5
* Forecast as contained in the combined circular
to shareholders dated 16 August 2001
Balance Sheet at 28 February 2002
28 February 28 February
2002 2001
R`000 R`000
ASSETS
Non-current assets
Fixed assets 28 706 4 386
Investments 28 024 154 16 575 752
Goodwill 193 148 13 032
Investment in associates 10 689 51
Loans and advances 28 741 5 831
Deferred taxation 4 786 -
Total non-current assets 28 290 224 16 599 052
Current assets 41 998 27 244
Cash and cash equivalents 62 059 55 475
Total assets 28 394 281 16 681 771
EQUITY AND LIABILITIES
Equity
Ordinary shareholders` funds 394 006 86 756
Outside shareholders` interest 438 707
394 444 87 463
Non-current liabilities
Provision for policyholder liabilities 27 930 170 16 575 752
Current liabilities
Trade and other payables 49 596 11 493
Taxation 20 071 7 063
69 667 18 556
Total equity and liabilities 28 394 281 16 681 771
Number of shares in issue (`000) 750 000 300 000
Net asset value per share (cents) 52,5 28,9
Net tangible asset value
per share (cents) 26,8 24,6
Statement of Changes in Equity for the year ended 28 February 2002
Non-
Share Share distributable Distributable
capital premium reserve reserve Total
R`000 R`000 R`000 R`000 R`000
Balance at 1 March 2001
as previously
reported 3 000 62 499 217 11 077 76 793
Adjustment to retained
income in respect of
change in accounting
policy AC107 - - - 9 963 9 963
Dividend paid on
30 April 2001 9 087 9 087
Secondary tax on
companies relating
to 2001 dividend 876 876
Balance at 1 March 2001
restated 3 000 62 499 217 21 040 86 756
Adjustment in respect
of change in
accounting policy (9 963) (9 963)
Issue of share capital 4 500 279 000 - - 283 500
Share issue expenses - (9 039) - - (9 039)
Increase in non-
distributable reserve - - 5 750 - 5 750
Attributable earnings - - - 37 002 37 002
Balance at
28 February 2002 7 500 332 460 5 967 48 079 394 006
Cash Flow Statement for the year ended 28 February 2002
28 February 28 February
2002 2001
R`000 R`000
Operating activities 4 081 510 5 868 115
Cash generated from operations 4 097 507 5 872 344
Net finance income 8 276 8 867
Taxation paid (15 186) (7 996)
Dividend paid (9 087) (5 100)
Investing activities (4 065 887) (5 851 622)
Fixed assets (11 950) (2 917)
Acquisition of subsidiaries 2 136 (11 374)
Increase in investments (4 023 126) (5 843 603)
Increase in associates (8 795) (200)
Increase in loans and advances (24 152) (1 354)
Decrease in other investments - 7 826
Financing activities (9 039) 38 981
(Expenses)/proceeds on share issue
Net increase in cash and
cash equivalents 6 584 55 474
Cash and cash equivalents at
beginning of year 55 475 1
Cash and cash equivalents at
end of year 62 059 55 475
FINANCIAL COMMENTARY
m Cubed Holdings, South Africa`s largest independent multi-manager, is
pleased to report that it has exceeded the forecast contained in the
circular to shareholders dated 16 August 2001. Headline earnings increased
by 150% to R53,9 million and headline earnings per share grew to 9,6 cents
from 7,5 cents. Assets under management have grown significantly in the last
six months, from R33,4 billion at the half year to R43 billion.
The merger between Escher Group and m Cubed Capital Holdings was
effective 1 August 2001. The results reflect 12 months of Escher and seven
months of m Cubed Capital while the results for the comparative period are
for Escher only. The results have been prepared in accordance with Generally
Accepted Accounting Practice, using the same accounting policies as were
used in Escher`s annual financial statements, except for the adoption of the
new accounting statement on Events After the Balance Sheet Date (AC 107). In
terms of this statement, dividends proposed or declared after the balance
sheet date and related secondary tax on companies are not recognised as a
liability at the balance sheet date. This change has been applied
retrospectively and opening retained earnings and comparative figures have
been restated.
Costs arising from the merger include a R3 million lease termination
payment and a loan investment of R1,242 million written-off.
GROUP HIGHLIGHTS FOR THE YEAR ENDED 28 FEBRUARY 2002
* Successful merger of Escher Group and m Cubed Capital Holdings to form m
Cubed Holdings effective 1 August 2001
* Consistently good investment performance enhanced by post-merger
restructuring
* Empowerment JV relationship forged with NUMSA Investment Company
* Purchase of 50% stake in Policy Exchange (Pty) Ltd, which specialises in
the on-sale of pre-owned endowment policies
* The group has seen strong business unit performance and benefited from
merger synergies.
PORTFOLIO PERFORMANCE
The benefits of m Cubed`s risk-controlled approach have been realised
during this past year. Its specialist multi-manager approach showed its
mettle particularly well in the turbulent market conditions experienced. The
5th Quadrant Survey shows m Cubed portfolios consistently occupying
positions in the 1st or 2nd quartile of the general fund categories over six
months and one year. In the multi-manager comparisons, m Cubed portfolios
occupy 1st or 2nd position in each of the four categories over six months
and one year to February 2002.
OPERATIONAL REVIEW
Retail Investments: This division is responsible for the distribution of
the group`s range of life, international, employee benefit, unit trust,
hedge fund and alternate investment products, via carefully selected
independent financial advisors. Sales for the 2002 year exceeded forecasts.
Asset Management: This division, which provides specialist multi-manager
asset management to institutional and private clients, was most directly
impacted by the merger. The Escher and m Cubed investment teams were
integrated relatively quickly. After a complete review of the underlying
asset manager structure a new combined portfolio structure was implemented,
which enabled the continued delivery of pleasing and consistent investment
performance and a growth in assets under management well ahead of
expectation.
Structured Products: This business specialises in the design,
implementation and administration of derivative-based capital-secured
investment products for the retail and institutional market. The merger
provided it with an opportunity to leverage the strong m Cubed retail
distribution base. The team performed in line with forecasts.
Specialised Investments: This is a niche provider of customized financial
solutions for institutions, corporate and high net worth individuals, with a
focus on regulatory and cross-border arbitrage. During the 2002 financial
year, the division focused on product development and extending its client
base, culminating in the conclusion of transactions with a value of
approximately R5,5 billion with leading SA companies. This division
performed to forecast.
Administration Outsourcing to Third Parties: This business provides local
and international clients with a full suite of administration services for
unit trusts, offshore mutual funds, wrap investment products, employee
benefits, asset management portfolios and life investment products. During
the year under review, the business grew substantially with the addition of
a number of significant asset management and wrap fund clients. Funds under
administration grew from R40 billion to R52 billion at year-end. The
business performed slightly behind forecast.
SEGMENTAL REPORTING
Contributions to headline earnings by business unit for the year ended 28
February 2002:
Headline Net
earnings revenue
% Annuity Upfront
Rm mix Rm Rm
Retail investments 19 35 52 53
Asset management 10 19 99 -
Treasury 10 19 12 -
Structured products 8 14 14 -
Specialised investments 7 13 - 11
Administration outsourcing - - 28 3
54 100 205 67
Due to differing business units prior to the merger, comparative figures
would be meaningless.
South African operations contributed R35 million to headline earnings,
with United Kingdom and other regions, contributing the balance of R19
million.
PROSPECTS
m Cubed is South Africa`s largest independent multi manager, with more
than R43 billion in assets under management. Our track record for innovation
and dominant size sees us well positioned to take advantage of any industry
consolidation with the concomitant economies of scale that come with this.
Delivering good, risk-controlled and consistent performance across all of
its funds remains a priority for the year to come, and this will play an
active part in assisting each of the businesses to build their market share.
Finally, we are also positive about the opportunities for the group that the
JV with NUMSA Investment Company brings, and we will actively pursue other
opportunities for mutually beneficial relationships.
DECLARATION OF DIVIDEND
Being a young and growing company, the directors have agreed on a
conservative dividend, nearly five times covered by headline earnings, of 2
cents per share for the year ended 28 February 2002. The dividend will be
payable to the shareholders recorded in the register at the close of
business on 26 June 2002.
The following dates are relevant to shareholders in respect of the dividend
payment:
Last date to trade Cum Dividend Wednesday, 19 June 2002
Commence trading Ex Dividend Thursday, 20 June 2002
Record date Wednesday, 26 June 2002
Date of dividend payment Thursday, 27 June 2002
Share certificates may not be dematerialised or rematerialised between
Wednesday, 12 June 2002 and Wednesday, 26 June 2002, both days inclusive.
For and on behalf of the board of directors
C M B Bothner J C Storey
Chairman Group managing director
21 May 2002
Directors:
C M B Bothner* (chairman), J C Storey (group managing director),
J F Mouton*, A Cabot-Alletzhauser (American), P J Croeser*, M M Dawes,
C A Otto*, W Roux*, I H S Sinton*.
Alternate:
R M Budge* (Scottish) (*Non-executive)
Company secretary:
J Steyn
Transfer secretaries:
Computershare Services Limited,
Edura House, 41 Fox Street, Johannesburg 2001.
PO Box 61051, Marshalltown, 2107.
Telephone: (011) 370-7700;
Facsimile: (011) 836-0792.
Registered office:
The Cube,
Investment Place, 10th Road (off 2nd Avenue), Hyde Park, 2196.
PO Box 41259, Craighall, 2024.
Telephone: (011) 340-2300.
Facsimile: (011) 880-8844.
www.mcubed.co.za
