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IOTA - AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 APRIL 2002
IOTA Financial Services Limited
(Registration number 1968/012195/06)
Share Code: IOT ISIN: ZAE 4014759
("IOTA" or "the Group")
AUDITED GROUP results for the Year ended 30 April 2002
Delivering a diverse product range of financial services to a select target
market
Income statement
R`000 2002 2001
Revenue
Turnover 97 381 227 841
Interest received 12 158 19 329
Dividends received 1 161 2 418
Surplus on disposal of investment - 6 213
110 700 255 801
Expenditure
Net claims incurred - (76 168)
Operating expenses (125 817) (135 837)
(125 817) (212 005)
Operating (loss)/profit (15 117) 43 796
Unrealised loss on trading securities (279) (1 087)
Interest paid (13 068) (6 916)
Loss on disposal of subsidiaries (12 825) -
(Loss)/profit before taxation (41 289) 35 793
Taxation (7 958) (9 265)
(Loss)/earnings attributable to
ordinary shareholders (49 247) 26 528
Headline (loss)/earnings (16 169) 31 409
Statistics
Number of shares in issue (000`s) -
net of treasury shares held
- in issue 51 277 56 272
- weighted 54 559 69 343
(Loss)/earnings per share (cents) (90,3) 38,3
Headline (loss)/earnings
per share (cents) (29,6) 45,3
Headline (loss)/earnings reconciliation
(Loss)/earnings attributable to
ordinary shareholders (49 247) 26 528
Amortisation of goodwill 4 219 5 732
Impairment - goodwill 6 577 -
- building 9 353 -
Loss on disposal of subsidiaries 12 825 -
Loss/(profit) on disposal of property,
equipment and vehicles 104 (851)
Headline (loss)/earnings (16 169) 31 409
Balance sheet
R`000 2002 2001
Assets
Property, equipment and vehicles 41 009 53 723
Immovable property 35 533 44 364
Equipment and vehicles 5 476 9 359
Intangible assets 2 625 16 869
Investments and loans 6 485 4 157
Finance agreement debtors 15 502 18 866
Other current assets 94 504 245 947
Debtors 79 643 229 886
Short term portion of finance agreement
debtors 14 861 16 061
Cash and cash equivalents 87 681 107 854
247 806 447 416
Equity and liabilities
Shareholders` funds 98 408 151 385
Interest bearing debt 61 256 103 754
Finance leases 46 040 43 975
Discounted finance liabilities 8 745 32 825
Other 6 471 26 954
Interest free liabilities 88 142 192 277
247 806 447 416
Net tangible asset value
per share (cents) 186,8 239,0
Net asset value per share (cents) 191,9 269,0
Cash flow statement
R`000 2002 2001
Cash effects of operating activities 10 528 30 701
Cash effects of investment activities (6 188) 3 166
Cash effects of financing activities (24 513) (24 247)
Net cash (outflow)/inflow (20 173) 9 620
Cash and cash equivalents at
beginning of year 107 854 98 234
Cash and cash equivalents at
end of year 87 681 107 854
Statement of changes in equity
R`000 2002 2001
Shareholders` funds at beginning
of year 151 385 154 576
Shares cancelled - (16 000)
Share buy-back (3 520) (13 225)
(Loss)/earnings attributable
to ordinary shareholders (49 247) 26 528
Other movements (210) (494)
Shareholders` funds at end of year 98 408 151 385
Notes
1. Accounting policies
The principal accounting policies used in the current year are consistent with
those of the prior year and are in compliance with South African Statements of
Generally Accepted Accounting Practice.
2. Auditor`s report
The financial statements have been audited by PricewaterhouseCoopers Inc., whose
audit opinion is available for inspection at the company`s registered office.
Commentary
Changes in structure
Further to the announcement of the unaudited six month results to 31 October
2001, additional changes in the Group have taken place. IOTA Policy Exchange
(Proprietary) Limited was sold with an effective date of 1 November 2001. In
addition, a division of IOTA Investment Services (Proprietary)Limited, managing
the Group`s employee benefits and healthcare services, was sold with an
effective date of 30 April 2002.
These changes are part of the Group`s ongoing review of its future direction.
Review of results
Despite difficult economic and trading circumstances, all the businesses - other
than IOTA Business Finance - have traded profitably in the current year.
However, the results have been negatively impacted by the following three
material issues:
As announced at the interim stage, R25 million was set aside to cover known
exposures within IOTA Business Finance (Proprietary) Limited following a
detailed review of the underlying book. Additional provisions of R3 million have
been created since the interim stage. Improved controls were put in place
subsequent to the management changes effected in the company and at the group
level with the appointment of a new chief executive officer. The cost structure
in the company has been reduced to a minimum with the focus of activity being
the effective collection of the remaining book.
MR Financial Management (Proprietary) Limited, acquired in 2001, has performed
below expectations and the outlook for improvement is not promising. This
situation has necessitated a review of the remaining unamortised goodwill and
this has resulted in an impairment charge of R6,6 million being recognised.
The changes effected in the group structure in the current year have resulted in
a high level of vacancy at IOTA Place and together with the oversupply of office
accommodation in the area has necessitated a review of the carrying value of the
building. The value has been determined by reference to an independent valuation
and has led to an impairment charge of R9,3 million being recognised.
The directors will be evaluating various options regarding the future
desirability of retaining IOTA Place under its current financing structure. The
original structure was concluded at a time of high interest rates. Any re-
negotiation of the current finance structure could result in an additional cost
of around R12 million being recognised at a future date.
The acquirers of Compass Insurance Company Limited have claimed a R7 million
(net of taxation) reduction in the purchase consideration. IOTA has objected to
this claim and the matter has been referred to experts for resolution in terms
of the disposal agreement. Having regard to the uncertainty, no provision in
respect of the claim has been recorded.
The cost base of the Group has been substantially reduced and the benefits will
be derived in the new year. Despite the challenges weathered in the current
year, the Group`s cash position, at R88 million, remains strong. In an effort to
preserve the Group`s cash position and in view of the fact that the Group is
under cautionary, no dividends will be declared at this time.
General
In view of the recent renewal of the cautionary announcement, the directors
continue to explore opportunities for enhancing shareholder value. Further
announcements will be made in due course.
For and on behalf of the board
PEB Reynolds
Chairman
JAEagar
Chief executive officer
24 July 2002
Investments - Opportunities - Trading - Acquisitions
DIRECTORS:
PEBReynolds* (Chairman), JA Eagar (Chief executive officer), DS Avnit*, JL
Burgess, DR Hilewitz*, AC Mackeurtan, MGOsmond, DLRose*
(*non-executive)
Registered office:
Waterford Financial Management (Proprietary) Limited, 27 Fricker Road, Illovo
2196
SHARE CODE IOT
ISIN CODE SAE000014759
Transfer secretaries:
Computershare Investor Services Limited, 11 Diagonal Street, Johannesburg 2001
INTERNET SITE: www.iota.co.za
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 25/07/2002 05:05:00 PM Produced by the JSE SENS Department
