| Thu 18 Jul 2002, 0:00 | | Reviewed Results For Lyons Financial Solutions Hol |
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REVIEWED RESULTS FOR LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED
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
("Lyons")
Consolidated Income Statement
for the year ended 31 May 2002
Reviewed Audited
31 May 2002 31 May 2001 Annualised
(12 months) (17 months) change
R`000`s R`000`s %
Fee income 32,457 47,426 (3.05)
Depreciation (235) (251) 32.64
Amortisation of goodwill (918) - -
Other operating costs (25,600) (25,427) 42.63
Net profit before interest
and taxation 5,704 21,748 (62.84)
Interest received 11 35 (55.48)
Interest paid (469) (1,314) (49.44)
Share of associate company
attributable earnings 11,403 - -
Net profit before taxation 16,649 20,469 15.23
Taxation 4,281 6,297 (3.69)
Attributable earnings 12,368 14,172 23.64
Impairment of investment 616 - -
Net amortisation of goodwill 250 - -
Headline earnings 13,234 14,172 32.30
Earnings per share
Weighted average shares,
including shares to be
issued 385,050,792 335,800,707 14.67
Earnings per share (cents) 3.21 4.22 7.83
Headline earnings per share
(cents) 3.44 4.22 15.37
Abridged Consolidated Balance Sheet
31 May 2002
Reviewed Audited
31 May 2002 31 May 2001
R`000`s R`000`s
ASSETS
Non-current assets
Property, plant and equipment 1,944 333
Investment in associate company 21,100 -
Investment in joint venture - 377
Employee share trust loans 1,080 450
Goodwill 11,163 -
Total non-current assets 35,287 1,160
Current assets 15,985 24,047
Total assets 51,272 25,207
EQUITY AND LIABILITIES
Capital and reserves 34,111 15,106
Non-current liabilities - interest
bearing 3,210 84
Short term portion of non-current
liabilities - interest bearing 1,370 40
Other current liabilities - non interest
bearing 12,581 9,977
Total current liabilities 13,951 10,017
Total liabilities 17,161 10,101
Total equity and liabilities 51,272 25,207
Net asset value per share
Number of shares in issue 380,419,350 202,933,844
Number of shares to be issued in respect
of business acquired 11,904,762 132,866,863
Total number of shares, including shares
to be issued 392,324,112 335,800,707
Net asset value per share based on total
shares (cents) 8.69 4.50
Consolidated Statement Of Changes In Equity
for the year ended 31 May 2002
Non- Net
Share Share distributable (loss)
capital premium reserve profit Total
R`000`s R`000`s R`000`s R`000`s R`000`s
Balance at
31 December
1999 33 2,350 (746) 1,637
Listing costs
at
31 May 2000
written off (2,035) (2,035)
Net surplus on
disposal
of Cape Town
and
Durban
businesses 1,332 1,332
Net profit
for the period 14,172 14,172
Balance at
31 May 2001
(audited) 33 315 1,332 13,426 15,106
Attributable
costs on
disposal of
Cape
Town and Durban
businesses (33) (33)
Surplus listing
provisions 8 8
Issue of shares
to acquire
businesses 4 4,158 4,162
Shares to be
issued
in respect of
business
acquired 1 2,499 2,500
Net profit for
the year 12,368 12,368
Balance at
31 May 2002
(reviewed) 38 6,980 1,299 25,794 34,111
Abridged Consolidated Cash Flow Statement
for the year ended 31 May 2002
Reviewed Audited
31 May 2002 31 May 2001
(12 months) (17 months)
R`000`s R`000`s
Operating activities 9,871 1,706
Investing activities (9,923) (1,479)
Financing activities 4,456 124
Movement in cash and short term funds 4,404 351
Opening cash and short term funds 1,443 1,092
Closing cash and short term funds 5,847 1,443
Segmental Revenue Report
for the year ended 31 May 2002
Reviewed Audited
31 May 2002 31 May 2001 Annualised
(12 months) (17 months) change
R`000`s R`000`s %
Lyons Asset Management 13,463 36,744 (48.09)
Lyons Corporate Services 7,965 3,776 198.83
Lyons Financial Engineering 11,029 6,906 126.24
Total fee income 32,457 47,426 (3.05)
Notes To The Abridged Consolidated Annual Financial Statements
31 May 2002
- There have been no changes in accounting policies during the year
ended 31 May 2002.
- The reviewed results have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice.
- The results have been reviewed by Lyons` auditors, Deloitte &
Touche Chartered Accountants (SA) and their review opinion is
available for inspection at Lyons` registered office.
- Owing to the nature of the business, no significant capital
expenditure has been committed for the coming year. Capital additions
during the current year amounted to R1.408 million (2001: R584 000).
- There is a contingent liability of R433 000 (2001: R433 000), being
a guarantee posted in favour of Tyaak Trading (Proprietary) Limited.
- Lyons has operating lease commitments in respect of its premises
and equipment at year end of R9.267 million (2001: R7.282 million),
R2.857 million (2001: R1.712 million) which is payable within one
year and the balance of R6.410 million (2001: R5.570 million) which
is payable thereafter.
- In respect of the sale agreement dated 28 February 2000 whereby
Lyons Asset Management (Proprietary) Limited acquired the property
asset management business from Mortimer Property Group (Proprietary)
Limited, an additional 2 998 643 ordinary shares in Lyons were issued
at 16 cents per share to the vendor in respect of having achieved
certain levels of profit.
Operational And Financial Review
Your company has achieved another set of strong results for the year to 31 May
2002, with headline earnings per share up 15% to 3.44 cents per share on an
annualised basis.
Assets under management grew 44% to R6.35 billion after obtaining the portfolios
of several large clients in the final six months of the year, including
Gautrans, Land Bank, OTK and Unilever. These results demonstrate a growing
realisation in the market that property is an asset class in its own right
requiring the same kind of specialisation and performance achievement you expect
of an equity fund manager.
A notable feature of the results is the strong rise in profitability following
the sale of its low-margin property broking business in the previous financial
year.
The company generated headline earnings of R13.2 million on fee income of R32.5
million.
Lyons generated R10 million in cash after investing R11 million to acquire a 45%
stake in the Lyons Corporate Lease Fund Limited. A further R7 million was
invested to acquire Thinking On The Right Track Holdings (Proprietary) Limited,
which has been incorporated into Lyons Corporate Services and will be positioned
to offer outsourced financial and business solutions to the Lyons corporate
client base.
The strong cash generation is the result of a quantum expansion of assets under
management and continued growth in annuity income streams. Corporate property
owners are realising that many of their property assets are under-performing,
and represent a drag on financial performance. Our approach, largely in a
discretionary capacity, is to add value to our clients` property portfolios and
to share in the risk and rewards of improving returns on these assets.
The group earned 25% of its revenue from the Lyons Corporate Lease Fund Limited,
which grew by nearly R80 million to R350 million in property assets acquired
over the last six months of the year under review. The Lyons Corporate Lease
Fund Limited could grow substantially further by drawing solely on the group`s
existing client base. The fund was created to provide innovative solutions for
corporate clients` real estate needs. Various options for expanding the fund are
under consideration.
Acquisitions
During the year under review the following strategic acquisitions were made by
Lyons:
- Thinking On The Right Track Holdings (Proprietary) Limited - a
business solutions firm advising both corporate and individual
clients on various financial, taxation, commercial, structuring and
planning issues, which naturally complemented the services already
provided by Lyons Corporate Services. 41 620 000 ordinary shares in
Lyons were issued to the vendor in part settlement of the acquisition
price at an issue price of 10 cents per ordinary share, with the
balance of the purchase price being settled in cash. This acquisition
contributed fee income to the group of R5.196 million during the
current year.
- Donne Investments (Proprietary) Limited - a company specializing in
the development of an integrated treasury function, incorporating
structured finance, securitization, debt origination and asset
management. This acquisition contributed fee income to the group of
R3.627 million during the current year. 11 904 762 ordinary shares in
Lyons are to be issued in respect of R2.5 million of the purchase
price, with the balance being settled in cash.
- A 45% interest in Lyons Corporate Lease Fund Limited - a real
estate fund established under an asset management agreement with
Lyons Asset Management to warehouse or incubate corporate clients`
properties.
Prospects
The group will continue to grow organically, retaining its focus on real estate
investment and asset management, but will seek vertical diversification through
corporate finance advisory work, asset and liability management and derivative
structures around real estate assets, and the launch of an innovative offshore
product which will allow South Africans to invest in a diversified and
professionally managed property portfolio in Europe, without having to own the
properties.
The offshore product, developed by our international alliance partner Aberdeen
Property Investors, a subsidiary of Aberdeen Asset Management Plc and
underwritten by a major international bank, will be offered to both retail and
wholesale investors in South Africa. Investors will be able to purchase a
European-wide property index comprising 73 of the most liquid property stocks in
Europe, or similarly deconstruct their investment to one or more countries.
Management expects strong interest in the product as an alternative to a direct
investment in offshore properties as well as local investment companies
diversifying exposure. The product will be launched locally once regulatory
approvals have been obtained from the Financial Services Board.
The imminent launch of new derivative structures will allow property owners to
effectively swap their properties for an investment in the JSE Securities
Exchange South Africa`s variable loan stock index, which offers an attractive
yield as well as the potential for capital gain.
Subsequent Events - Corporate Activity
Lyons announced on Friday, 14 June 2002 that subject to the fulfilment of the
conditions precedent, an agreement had been reached in terms of which Lyons will
issue R9 million convertible, redeemable debentures to Nedcor Investment Bank
Limited. The remaining condition to be fulfilled is approval by shareholders
eligible to vote in general meeting, which general meeting is taking place on 26
July 2002.
GARRY FROMENTIN
CHIEF EXECUTIVE OFFICER
IAN HEWETT
CHIEF FINANCIAL OFFICER
18 July 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*, K Modise*
*Non-executive **British
Engineered thought
www.lyons.co.za
Date: 18/07/2002 12:00:00 PM Produced by the JSE SENS Department
