| Thu 23 May 2002, 0:00 | | Unifer Holdings Limited - Qualified Audited Result |
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Unifer Holdings Limited - Qualified Audited Results For The Year Ended 31
March 2002
Unifer Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/0100061/06)
(Share code: UNF ISIN: ZAE000027504)
("Unifer" or "the company")
QUALIFIED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2002
The qualified audited results for the year ended 31 March 2002
are set out below. This report has been prepared in terms of
South African Statements of Generally Accepted Accounting Practice.
CONSOLIDATED BALANCE SHEET
2002 2001
Note R`000 R`000
ASSETS
Property and equipment 44 957 63 131
Investments 62 735 58 579
Government and
public sector securities 1 409 155 091
Intangible assets - 84 548
Deferred Taxation 28 540 142 631
Advances and loans 1,2 2 960 976 4 338 885
Other assets 160 845 222 028
Short-term money market assets 272 791 24 876
Cash and short-term assets 271 291 323 638
Total assets 3 803 544 5 413 407
EQUITY
Share capital 12 707 12 680
Share premium 704 072 700 257
(Accumulated loss)/ Reserves (2 086 726) 271 300
Total equity (1 369 947) 984 237
LIABILITIES
Deferred taxation 6 470 3 834
Funding by Absa Bank Limited 1 3 633 344 1 113 948
Deposits and current accounts 1 131 169 2 692 206
Debentures 16 000 16 000
Other liabilities 346 333 475 858
Bank overdrafts - 12 259
Taxation payable 40 175 112 568
Outside shareholders` interest - 2 497
Total liabilities 5 173 491 4 429 170
Total equity and liabilities
3 803 544 5 413 407
CONSOLIDATED INCOME STATEMENT
2002 2001
Note R`000 R`000
Interest income 1 231 474 1 004 495
Interest expense 625 855 443 833
Net interest income 605 619 560 662
Charge for bad and doubtful advances 2 2 406 495 313 062
(Loss)/income from lending activities (1 800 876) 247 600
Non-interest income 410 585 476 048
Operating (loss)/income (1 390 291) 723 649
Operating expenditure 689 092 416 054
Net (loss)/income
before exceptional items (2 079 383) 307 595
Exceptional items 3 51 200 17 948
Net (loss)/income before taxation (2 130 583) 289 647
Taxation 158 772 72 329
Net (loss)/income after taxation (2 289 355) 217 318
Outside shareholders interest 5 380 2 517
Net (loss)/income attributable
to ordinary shareholders
(2 294 735) 214 801
(Loss)/Earnings per share (176) 17
Headline (loss)/ earnings per share (172) 18
Determination of headline (loss)/earnings
Net (loss)/income attributable
to ordinary shareholders (2 294 735) 214 801
Exceptional items 51 200 17 948
Headline (loss)/earnings (2 243 535) 232 749
Weighted average shares in issue (`000) 1 305 171 1 284 234
SEGMENTAL REPORTING
2002 2001
R`000 R`000
Net (loss)/income after taxation
Banking and distribution (2 305 603) 207 247
Insurance activities 16 248 10 071
(2 289 355) 217 318
Attributable (loss)/earnings
Banking and distribution (2 310 983) 207 224
Insurance activities 16 248 7 577
(2 294 735) 214 801
Headline earnings
Banking and distribution (2 259 783) 225 172
Insurance activities 16 248 7 577
(2 243 535) 232 749
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Non-dis
Shareholders
Capital and Retained tributable funds
premium income reserves Total
R`000 R`000 R`000 R`000
GROUP
Balance at 31 March 2000 744 629 111 901 2 492 859 022
Transfers relating to
insurance contingency
reserves - (4 608) 4 608 -
Unrealised gains on
investments held by
short-term insurance
company - 85 (85) -
Attributable income - 214 801 - 214 801
Dividends declared - (57 894) - (57 894)
Elimination of treasury
shares arising from
repurchasing (31 692) - - (31 692)
Balance at 31 March 2001 712 937 264 285 7 015 984 237
Transfers relating to
insurance contingency
reserves - 8 869 (8 869) -
Unrealised gains on
investments held by
short-term insurance
company - (1 854) 1 854 -
Attributable income - (2 294 735) - (2 294 735)
Dividends declared - (63 291) - (63 291)
Utilisation of treasury
shares arising
from repurchasing 3 842 - - 3 842
Balance at 31 March 2002 716 779 (2 086 726) - (1 369 947)
CONSOLIDATED CASHFLOW STATEMENT
2002 2001
R`000 R`000
Cash retained from operating activities
Cash receipts from customers 1 636 352 1 480 824
Cash paid to customers, employees
and suppliers (1 265 751) (841 531)
Cash available from
operating activities 370 601 639 293
Dividends paid (63 291) (57 897)
Net cash inflow from operating activities 307 310 581 396
Net decrease in operating funds (2 752 198) (708 183)
Taxation paid (114 438) (87 304)
Cash utilised in investing activities (4 000) (231 351)
Cash generated from financing activities 2 523 238 177 551
Decrease in cash and cash equivalents (40 088) (267 891)
Cash and cash equivalents at beginning
of year 311 379 579 270
Cash and cash equivalents assets at
end of year 271 291 311 379
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2002 2001
R`000 R`000
1 ADVANCES AND LOANS
Retail overdrafts and credit cards 173 123 173 542
Instalment finance 473 907 651 942
Mortgages 259 889 282 821
Term loans 4 336 748 3 495 891
Personal loans 170 797 154 590
Other - properties in possession 4 302 11 336
5 418 766 4 770 122
Provisions for bad and doubtful advances (2 457 790) (431 237)
2 960 976 4 338 885
Advances of R4,360 million have been
pledged to Absa Bank Limited as security
for the granting of a facility of R3,633 million.
Absa Bank Limited has deferred its rights
to claim on an amount of R1,600 million
in favour of other creditors until such
time as Unibank`s assets, fairly valued,
exceeds its liabilities.
2 PROVISIONS FOR BAD AND DOUBTFUL ADVANCES
Balance at beginning of year 431 237 263 655
Amounts written off during the year (380 098) (153 887)
Provisions raised during year 2 406 651 314 465
Provision of subsidiaries at acquisition - 7 004
Balance at the end of year 2 457 790 431 237
Comprising
Specific provisions 1 076 410 356 619
Specific general provisions 1 316 380 -
General provisions 65 000 74 618
2 457 790 431 237
Income statement charge
Provisions raised during year 2 406 651 314 465
- Specific provisions 1 099 889 293 488
- Specific general provisions 1 316 380
- General provision (9 618) 20 977
Recoveries of advances
previously written off (156) (1 403)
Charge to income statement 2 406 495 313 062
2002 2001
R`000 R`000
3 EXCEPTIONAL ITEMS
Goodwill written off 51 200 -
Discontinued operations - 17 948
51 200 17 948
COMMENTARY ON RESULTS
Following various press announcements regarding the deterioration in the
quality of the advances book of UniFer, it was announced to shareholders on
7 March 2002 that the Board has determined the net asset value of UniFer to
be a negative R1 144 million, which equated to a negative net asset value
per share of 87, 8 cents.
At 31 March 2002 the net asset value has been determined to be a negative
R1 370 million which equates to a negative net asset value per share of 105
cents.
Movement in net asset value since 30 September 2001 (interim reporting
date) to 31 December 2001 and to 31 March 2002, respectively, can be
summarised as follows:
Movement for Movement for
the three the three
months to months to
31 December 31 March
2001 2002
R` million R` million
Net Asset Value at 30 September 2001 1 031 -
Net Asset Value at 31 December 2001 - (1 144)
Additional provisions for bad debts (1 780) -
Other Asset impairments (165) (7)
Impairment of Deferred Tax Asset (204)
Trading for 3 months (230) (15)
Net Asset Value at end of period (1 144) (1 370)
As a result of the exceptional high levels of provisions for bad and
doubtful advances the headline loss for the year amounts to R2 243 million
compared to headline earnings of R233 million for the 2001 year.
Following the announcement of 7 March 2002, Absa Bank Limited ("Absa")
announced its intention to integrate Unibank Limited ("Unibank") after the
successful conclusion of the scheme of arrangement in terms of section 311
of the Companies Act. Doubt therefore exists about the ability for Unibank
to utilise the deferred tax asset resulting from the losses it has suffered.
It was therefore decided to reverse the recognition of any remaining
deferred tax asset in Unibank. The remaining deferred tax assets on the
consolidated balance sheet pertains to the subsidiaries of UniFer, other
than Unibank.
Results for the second half of the year were materially affected by an
initial slowdown and eventual curtailment of advances in the micro loans
market.
OVERVIEW
The losses incurred were the result of excessive advances growth
exacerbated by a breakdown in administrative processes and internal
controls.
Since the emergence of these problems the management structure at UniFer
has been significantly strengthened. Where deemed necessary, Absa has
seconded personnel to fill management positions. Credit granting processes
and criteria have been reviewed and significantly improved. The collections
function has been substantially restructured and bolstered by the creation
of additional posts despite a rightsizing exercise.
Management has focussed its attention on securing the outstanding book,
cost- cutting, exploiting new profitable business and the re-alignment of
the business in order to integrate it with the Absa systems.
ACCOUNTING POLICIES
The accounting policies followed in respect of the preparation of the
financial statements at 31 March 2002 which conforms to the South African
Statements of Generally Accepted Accounting Practice were consistent to
those followed in the preceding financial year.
Due to the changing circumstances in the micro lending industry as a
result of particularly payroll based lending (Persal and other) being
curtailed and the consequential introduction of alternative collection
methods, the method of determining doubtful advances had to be adapted to
take into account these circumstances and been has tested against best
practice followed in this industry.
This methodology has been applied at 31 December 2001 and 31 March 2002.
REPURCHASE OF SHARES
In terms of the authority given by shareholders at the Annual General
Meeting held on 21 September 2001, 5 278 456 shares at an average price of
84 cents per share (2001: 18 921 100 shares at an average price of 82 cents
per share.) were repurchased to be held as treasury shares.
8 000 000 shares at price of 82 cents per share were utilised to settle
an outstanding purchase price due to the vendors of Ferreira`s.
OFFER TO MINORITIES
In a circular to shareholders dated 25 April 2002, a scheme of
arrangement in terms of section 311 of the Companies Act was announced.
The essence of the scheme is that, upon implementation, Absa Group
Limited will effectively become the owner of the entire share capital of
UniFer. At a meeting of scheme shareholders to approve the scheme, held on
Monday 20 May 2002, shareholders holding 355 179 773 scheme shares,
representing 95, 26% of the voted scheme shares, voted in favour of the
scheme. As this represents a majority in excess of three-fourths required
to approve the scheme, the Company will now proceed with the application to
the High Court to sanction the scheme. It is expected that the High Court
will hear the application on 28 May 2002.
Should the scheme be sanctioned, it is expected that UniFer`s listing
will be suspended on 10 June 2002, and that scheme members` consideration
for their shares of 6.25 cents per share will become payable on 18 June
2002.
REPORT BACK ON INVESTIGATIONS
Several investigations into corporate governance and other matters are
still in process. It is envisaged that the directors will report on these
matters as soon as they are finalised. It is anticipated that this will
occur before UniFer is finally delisted from the JSE.
DIVIDENDS
A dividend of 5 cents per share was paid on 8 June 2001 in respect of the
year ended 31 March 2001.
No dividend has been declared in respect of the year ended 31 March 2002.
DISPOSAL OF BUSINESSES
Following a notification of the intention to exercise an option, by the
minority shareholders in Blake & Associates (Pty) Limited; to re-acquire the
shares in that company UniFer has not consolidated this subsidiary. The
group expects that the disposal, if effected, would result in a modest
profit on disposal.
AUDITORS` REPORT
The independent auditors, Ernst & Young, have qualified their report on
the Annual Financial Statements for the year ended 31 March 2002 in the
following respects:
Contingent Liability regarding charges
Charges in certain advances may be in contravention of statutory
legislation. Management are reviewing these advances in order to determine
whether or not there is a contingent liability in this regard.
Approval of Agreements
There are a number of agreements relating to significant transactions
with related parties that have not been signed nor approved by the Board of
Directors. Therefore, it has not been possible to establish the validity of
these transactions.
Except for the effect of the matters referred to above the auditors are
of the opinion that the financial statements fairly present, in all material
respects, the financial position of the UniFer Group at 31 March 2002.
On behalf of the Board
A M Griesel G L Kretzchmar
(Deputy Chairman) (Chief Executive Officer)
23 May 2002
Directors:
L Lipschitz (Chairman), A M Griesel (Deputy Chairman),
G L Kretzchmar (Chief Executive Officer), R J N Ballantine, E R Bosman,
F J du Toit, C J Ferreira, A Maraney, W D Nel, L L Walters.
Secretary and Registered Office:
K P E Davies,
27 Impala Road, Chislehurston, Sandton 2196
(Private Bag X9941, Sandton 2146)
Transfer secretaries:
Computershare Investor Services Limited,
8th Floor, 11Diagonal Street, Johannesburg, 2001
(PO Box 1053, Johannesburg 2000)
