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Mettle 2002 Annual Financial Statements
METTLE LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1996/010795/06)
JSE Short code: MEL
ISIN No: ZAE 000028569
("the company")
METTLE 2002 ANNUAL FINANCIAL STATEMENTS
Managing Director`s Report
The year in review has produced interesting times for Mettle. Not only did
we have to deal with a changing economic environment and its toll on the
financial services sector, but also with the impact of specific events
within Mettle, such as the integration of Greenwich and the de-listing
issue.
We are therefore pleased to post consistent earnings growth for the year
under review. The strength of the business is due to our robust and
entrepreneurial business model, and above all to the hard work and creative
thinking of our people. The ethos of Mettle has always been to create a
working environment that will allow talented people to fulfill their
potential, and enjoy themselves while they are doing it. The loyalty of our
staff and the continuing growth of our team leave me confident that this
spirit will lead to further success in future.
Financial Results
We have maintained our headline earnings growth at historic levels of over
30%. Particularly pleasing is the 37,70% rise in headline earnings to
R91.6m. Our return on equity remains at a highly creditable 31,04% and we
believe this ratio to be sustainable going forward. The acquisition of
Greenwich and the restructuring that followed is complete, and the impact
can be seen in our financials. Although the Greenwich transaction bought us
cash at a discount, the shares issued to pay for the acquisition have
restricted our growth at headline EPS level to 10,6%. To a large degree our
aggressive share buyback programme towards the end of the year should
positively impact this ratio in the coming year.
Overview
From an operational perspective, our business continues to focus on niche
areas where we can offer innovative solutions to our client base. Financial
services players across the board have been impacted by the changing
economic conditions, but our business and extensive client base remain as
robust as ever. Our financial performance shows that we continue to
outperform the sector, which is very pleasing, given the volatile market
conditions that we faced during the year.
As regards the attempted delisting, we are delighted with the confidence
which institutional shareholders showed in our business and the valuation
they placed on it, and we look forward to their continued support.
Mettle has disposed of the historic Greenwich UK business to its management
with effect from 1 February 2002. The business was not performing to the
levels we had expected, and we found it difficult to maintain appropriate
control of the business from a distance. We were unable to leverage any
significant benefits off the business for the rest of our operations, and we
felt that the risks attached to a short-term broking operation were no
longer appropriate in light of the associated returns. We nevertheless
maintain our original Mettle UK operation, which complements our South
African core business.
We have expanded the scope of our services in SA by hiring a highly rated
interest rate hedging and structuring team to add to our existing expertise
in that area. With the nature of our core business focused on the
origination, structuring and distribution of debt, the expansion of the
interest rate hedging team allows us to offer a more integrated and
comprehensive service to our clients. This applies both to originators of
debt, for whom we can now hedge their interest rate exposure, and to the
acquirers of debt, for whom we can manage the yield on the debt.
Prospects
We have built a brand that stands for high quality and innovative solutions
to our clients, and the intellectual capital built up in the business puts
us at the forefront of our chosen niches. The challenging market conditions
that we have experienced and will continue to experience, has resulted in a
natural attrition of some of our peers, where those who cannot compete fall
by the wayside whilst the market leaders emerge stronger for the experience.
Mettle is entering a more mature phase in its business cycle after the
explosive growth of its early years. We believe that this next phase of our
growth will strengthen our business for the long term by shifting our
emphasis towards longer term prospects and projects that will bear fruit
over the coming years. Our skills base is aligned to these projects and we
have everything in place to ensure their success.
Mettle remains as entrepreneurial as ever, open to new ways of thinking
about its own structure and to new ideas in the markets in which it
operates. The success of the business remains driven by the people who make
it what it is. I would like to thank the Board of Directors for their
support over a challenging year, and the management and staff of Mettle for
another year of hard work and an excellent performance under challenging
circumstances.
G M OConnor
06 June 2002
FINANCIAL HIGHLIGHTS
HEADLINE EARNINGS UP BY 37,70%
HEADLINE EARNINGS PER SHARE UP by 10,6%
NET ASSET VALUE PER SHARE UP 29,4% TO 58,33 CENTS
RETURN ON EQUITY 31,04%
GROUP COMPANY
31 MARCH 31 MARCH 31 MARCH 31 MARCH
2002 2001 2002 2001
R R R R
AUDITED ABRIDGED BALANCE SHEETS AS AT 31 MARCH 2002
ASSETS
Non-current
assets
Fixed assets 11 570 512 15 934 065 - -
Investments and 54 587 772 67 435 689 518 698 189 585 128 788
loans
Deferred tax 21 978 073 3 558 860 - -
Current assets
Trading assets 3 221 490 527 980 937 809 - -
Short term 90 617 249 102 984 578 920 016 484 168
receivables
Cash and cash 293 058 505 248 280 961 759 263 1 271 000
equivalents
Total assets 3 693 302 638 1 419 131 962 520 377 468 586 883 956
EQUITY AND
LIABILITIES
Capital and
reserves
Total 331 758 357 298 168 068 519 615 013 586 745 976
shareholders`
funds
Non-current
liabilities
Net financial 69 804 816 113 665 840 - -
liabilities
Deferred tax 10 484 108 5 905 903 - -
Current
liabilities
Short term 49 847 317 64 774 384 762 455 36 335
payables
Trading 3 227 514 785 930 225 356 - -
liabilities
Taxation 3 893 255 6 392 411 - 101 645
Total equity and 3 693 302 638 1 419 131 962 520 377 468 586 883 956
liabilities
AUDITED INCOME STATEMENTS FOR THE YEAR ENDED 31 MARCH 2002
Revenue 208 079 157 139 692 407 20 637 264 2 185 893
Operating income 179 709 728 110 510 884 - -
Net financing 25 391 626 18 016 217 1 336 460 2 097 614
income
Income from 2 977 803 11 165 306 19 300 804 88 279
investments
Less: Operating 123 118 427 72 028 859 2 421 686 6 722 973
Expenses
Profit before
exceptional 84 960 730 67 663 548 18 215 578 (4 537 080)
items
and taxation
Exceptional 1 116 450 24 958 879 - -
items
Profit before 86 077 180 92 622 427 18 215 578 (4 537 080)
taxation
Taxation (6 409 292) 3 014 699 182 366 312 920
Profit for the 92 486 472 89 607 728 18 033 212 (4 850 000)
year
Calculation of
headline
earnings
Profit for the 92 486 472 89 607 728
year
Adjustments (869 117) (23 075 386)
(after tax)
Loss on sale of 247 333 1 883 493
fixed assets
Loss on
repricing of 4 453 477
share incentive
scheme shares
Profit on the (5 569 927)
sale of
subsidiary
Negative (24 958 879)
goodwill
released (Note
1)
Headline 91 617 355 66 532 342
earnings after
tax
Headline
earnings per
share (cents)
Basic 14.49 13.10
Diluted 13.36 12.83
Earnings per
share (cents)
Basic 14.63 17.64
Diluted 13.49 17.29
Earnings per
share (cents)
as previously
stated (2001)
Basic - 19.85
Diluted - 19.45
Dividend per 2.62 1.08
share (cents)
AUDITED ABRIDGED CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 2002
Net cash flow
generated by 115 847 807 29 866 004 1 314 198 2 293 052
operating
activities
Net cash flow
(utilised
in)/generated by (17 145 842) 87 741 894 64 769 764 (32 959 101)
investing
activities
Net cash flow
utilised in (53 924 421) (78 638 501) (66 595 699) (11 870 476)
financing
activities
Net increase/
(decrease) in 44 777 544 38 969 397 (511 737) (42 536 525)
cash and cash
equivalents
Cash and cash
equivalents at 248 280 961 209 311 564 1 271 000 43 807 525
beginning of
year
Cash and cash
equivalents at 293 058 505 248 280 961 759 263 1 271 000
the end of year
AUDITED ABRIDGED STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31
MARCH 2002
Equity at 298 168 068 187 225 003 586 745 976 133 463 886
beginning of
year
Changes in share
capital and (51 583 339) 27 732 883 (66 595 699) 458 132 090
share premium
Changes in non-
distributable 9 473 877 (777 220) - -
reserves
Net profitable
attributable to 92 486 472 100 845 087 18 033 212 (4 850 000)
ordinary
shareholders
Adjustment to
retained - (11 237 359) - -
earnings (Note
1)
Dividends (16 786 721) (5 620 326) (18 568 476) -
paid/declared
Equity at end of 331 758 357 298 168 068 519 615 013 586 745 976
year
SEGMENT ANALYSIS FOR CURRENT YEAR
REVENUE RESULTS
Funding and 153 289 020 74% 115 967 644 125%
investment
services
Corporate finance 3 629 772 2% (1 795 311) (2%)
Treasury and cash
management 47 981 050 23% (9 169 717) (10%)
operations
Other 3 179 315 1% (12 516 144) 13%
208 079 157 100% 92 486 472 100%
The accounting policies used are consistent with those used in the previous
year and those disclosed in the group`s most recent annual financial
statements. The above report complies with AC127.
Note 1
Negative goodwill on the acquisition of the Greenwich operation of R36 196
238 during the 2001 financial year, has been restated to R24 958 879 in
terms of AC131 - Business Combinations. Subsequent to the acquisition of the
Greenwich group, additional evidence has become available to assist with the
calculation of the fair value of the assets and liabilities that existed on
acquisition and the restatement represents these differences.
Headline earnings per share
Headline earnings per share is calculated by dividing headline earnings
after tax by the weighted average number of shares in issue during the year.
Weighted average number of shares
The basic earnings per share is based on a weighted average number of shares
of 632 246 988 (2001: 507 951 460) ordinary shares and the diluted earnings
per share on a weighted average of 685 801 076 (2001: 518 371 702) ordinary
shares.
Final dividend
Notice is hereby given that the board has declared a final dividend of 2,74
cents per ordinary share. A further announcement in this regard will be
published in the press and on SENS on Tuesday, June 18 2002.
Date: 12/06/2002 04:00:00 PM Produced by the SENS Department
Mettle Limited - Dividend Declaration
METTLE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/010795/06)
JSE Share code : MEL ISIN : ZAE000028569)
DIVIDEND DECLARATION
Notice is hereby given that the board has declared a final dividend of 2,74
cents per ordinary share in respect of the financial year ended 31 March
2002. The dividend will be paid on Monday, 15 July 2002.
To comply with the procedures of STRATE the last day to trade in the shares
for purposes of entitlement to the final dividend is Friday, 5 July 2002.
The shares will commence trading ex-dividend on Monday, 8 July 2002 and the
record date will be Friday, 12 July 2002.
Shareholders may not dematerialise or rematerialise their shares between
Monday, 1 July 2002 and Friday, 12 July 2002 (both days inclusive).
Illovo
18 June 2002
Date: 18/06/2002 05:24:01 PM Produced by the SENS Department
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