| Thu 29 Aug 2002, 0:00 | | Appleton Limit |
|
APPLETON LIMITED
("Appleton")
* Total assets under management increase by 8% to R4,1 billion
* International assets under management exceed US$238 million
* Net operating income increased by 7% to R15,4 million
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2002
GROUP INCOME STATEMENTS
Reviewed Unaudited Audited
12 Months 12 Months 16 Months
Ended Ended Ended
30 June 2002 30 June 2001 30 June 2001
R`000 R`000 R`000
Gross revenue 166 730 143 308 146 133
Fee and trading income 12 021 13 753 13 980
Finance costs (4 426) (2 567) (2 659)
Net unrealised forex gain 7 832 3 265 3 265
Net operating income 15 427 14 451 14 586
Fair value adjustment - JSE Rights (3 761) 4 134 4 134
Restructure and relocation costs (2 717) (1 657) (1 657)
Amortisation of goodwill and
restraint of trade costs (5 907) (4 665) (4 665)
Income before taxation 3 042 12 263 12 398
Taxation 791 740 700
Net income after taxation 3 833 13 003 13 098
Income from associate - 54 54
Attributable to outside
shareholders (2 868) (2 290) (2 290)
Net attributable earnings 965 10 767 10 862
Number of shares in issue (`000) 1 088 903 1 096 538 1 096 538
Weighted average number of shares
in issue (`000) 1 090 500 1 127 304 895 002
Headline earnings per share (cents) 0,98 1,08 1,37
Basic and fully diluted earnings
per share (cents) 0,09 0,96 1,21
NAV per share (cents) 7,98 8,14 8,14
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Unaudited Audited
12 Months 12 Months 16 Months
Ended Ended Ended
30 June 2002 30 June 2001 30 June 2001
R`000 R`000 R`000
Net attributable earnings 965 10 767 10 862
Amortisation of goodwill 5 041 4 391 4 391
Net retrenchment costs 881 1 160 1 160
Fair value adjustment - JSE Rights 3 761 (4 134) (4 134)
Headline earnings 10 648 12 184 12 279
SEGMENTAL ANALYSIS OF HEADLINE EARNINGS
R`000 %
Appleton International Asset Management 6 437 36
Appleton Asset Management (South Africa) and
Private Wealth 7 015 40
Appleton Securities 4 186 24
Total segmental earnings 17 638 100
Group infrastructure costs (13 190)
Net operational earnings 4 448
Net unrealised forex gain after taxation 6 200
Headline earnings 10 648
GROUP BALANCE SHEETS
Reviewed Audited
30 June 2002 30 June 2001
R`000 R`000
ASSETS
Non-current assets 47 465 52 686
Property and equipment 26 094 26 168
Loans receivable 664 2 866
Investments 9 737 11 816
Goodwill and intangible asset 6 067 9 048
Deferred taxation 4 903 2 788
Current assets 232 989 301 036
Accounts receivable 50 061 73 007
Accounts receivable in respect of stockbroking
activities 122 997 182 590
Cash resources 59 931 45 439
Total assets 280 454 353 722
EQUITY AND LIABILITIES
Capital and reserves 86 887 89 263
Outside shareholders` interest 7 010 12 275
Long-term liabilities 5 760 9 541
Current liabilities 180 797 242 643
Accounts payable and provisions 37 357 56 512
Accounts payable in respect of stockbroking
activities 125 928 182 590
Bank overdraft 17 512 3 541
Total equity and liabilities 280 454 353 722
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS` FUNDS
Reviewed 12 months ended 30 June 2002
Non- Reverse
Share Capital Distributable Take Over Retained
and Premium Reserves Adjustments Income
R`000 R`000 R`000 R`000
Balance at beginning of
the year as previously
reported 134 003 (430) (76 116) 32 887
Restatement as a result
of change in accounting
policy - - - (1 081)
Restated balance at the
beginning of the year 134 003 (430) (76 116) 31 806
Treasury stock held by
subsidiary company (721) - - -
Foreign currency
translation reserve - 657 - -
Dividend paid - - - (3 277)
Net attributable
earnings - - - 965
Balance at 30 June 2002 133 282 227 (76 116) 29 494
ABRIDGED GROUP CASH FLOW STATEMENTS
Reviewed Audited
12 Months 16 Months
Ended Ended
30 June 2002 30 June 2001
R`000 R`000
Net cash inflows from operating activities and
effect of exchange rate changes on cash and
cash equivalents 14 308 43 647
Net cash outflows from investing activities (3 123) (95 571)
Cash flows from financing activities (10 664) 92 265
Net increase in cash and cash equivalents 521 40 341
Cash and cash equivalents at the beginning of
the year 41 898 1 557
Cash and cash equivalents at the end of the year 42 419 41 898
Notes
1. Accounting policies
The principle accounting policies adopted in preparing the consolidated
financial statements comply with South African Statements of Generally Accepted
Accounting Practice and are consistent with those applied for the sixteen month
period ended 30 June 2001, with the exception of the following:
In the previous financial periods Appleton had not provided in full for leave
pay. In order to comply with AC 116, leave pay is now being provided for in
full and Appleton`s results for the previous financial year have been restated
as a result.
2. Review by auditors
The group`s auditors, Deloitte & Touche, have reviewed the preliminary results
reflected above. Their unqualified review opinion is available on request from
the Company Secretary.
COMMENTARY
Appleton is pleased to announce an increase in net operating income of 7% from
R14,4 million to R15,4 million for the financial year ended 30 June 2002. This
performance was achieved against a backdrop of high levels of volatility and
uncertainty in financial markets both locally and internationally, a significant
decline in the value of the Rand and a general weakening in global equity
markets.
REVIEW OF OPERATIONS
Appleton International Asset Management
Appleton International Asset Management operates a global multi management and
trading advisory business with offices in London, Dublin and Guernsey. Clients`
assets under management internationally currently exceed US$238 million (R2,4
billion) (June 2001 : US$249 million).
London
Appleton London was granted a FSA license at the beginning of the financial year
and is the appointed asset manager to the Guernsey registered Appleton funds.
The strategy of using alternative investment strategies as a fourth asset class
has enabled the company to deliver positive real returns for clients, despite
the turbulent global financial markets that prevailed during the year.
Guernsey
The Guernsey operation houses the majority of Appleton`s offshore funds and also
provides clients with fiduciary and trust management services. The Guernsey
operation currently has approximately 4 000 investors and in excess of US$169
million of clients` funds under management. (June 2001: US$146 million).
Dublin
The management team of Appleton Capital Management (Dublin) achieved their two-
year profit warranty targets and accordingly Appleton`s shareholding in the
business was reduced from 80% to 70% as stipulated in the acquisition agreement.
At the start of the financial year the Dublin business had funds under
management of US$103 million. During January 2002, the liquidity of one of the
Dublin-based funds was reduced and as a result it was no longer possible to
achieve the return profile that the fund set out to achieve. Accordingly, the
institutional client invested in this specific fund was requested to withdraw
their funds of approximately US$56 million. However, the business continued to
attract new fund inflows and at 30 June 2002 had US$69 million in funds under
management.
Appleton Asset Management (South Africa) and Private Wealth
The local asset management operation generates annuity income from the asset
management fees, which are received monthly based on the R1,7 billion of assets
(June 2001: R1,8 billion) managed on behalf of third parties (R485 million
represents institutional assets). During the reporting period two new unit trust
funds were launched, namely the Appleton Prudential Fund of Funds and the
Appleton Macro Active Fund of Funds. The combined assets in these two funds
already exceed R93 million.
Geographical split of assets under management
58% International assets
42% Local assets
Appleton Securities
The Securities operation is highly geared to the market activity on the JSE.
This, together with the requirement to invest further capital into the business
as a result of the implementation of STRATE and the merger of the JSE and LSE
platforms, has reduced the profitability of this division. Appleton On-line
continued to trade profitably and has seen satisfactory growth in its client
base this year. During the latter part of the year a strategic decision was
taken to close down Appleton`s corporate finance department in order to focus
resources on the company`s core operations and the resultant cost of R2 million
was included in restructure costs.
Other
Unrealised foreign exchange gains arose from US Dollar denominated loans owing
by offshore Appleton companies to the local operations.
Appleton has spent considerable resources in establishing an infrastructure to
support its growing assets under management. These group costs include
information technology, marketing,
human resources, risk management and finance expenditure.
The 2% decline in net asset value per share this year is principally as a result
of the write-down of investments, being JSE Rights to market value and the
amortisation of goodwill and other intangible assets.
BOARD OF DIRECTORS
Stanley Shane, an executive director responsible for corporate finance, will be
leaving the company to enable him to play a more active role in his capacity as
Chief Executive Officer of IMR Investments Limited. Mr Shane will however remain
on the board as a non-executive director and act as a consultant to the group
for a period of time. The change is effective from 28 August 2002.
It is Appleton`s intention to appoint additional non-executive directors in the
near future to align the company more closely with the recommendations of the
King II code of corporate governance.
SHAREHOLDERS
It was announced on 6 August 2002 that ABSA had proposed a scheme of arrangement
which would result in ABSA acquiring PSG Investment Bank Holdings Limited which
in turn has an indirect 29% shareholding in Appleton.
DIVIDEND
Notice is hereby given that a dividend (No. 2) of 0,27 cents (2001: 0,30 cents)
per share has been declared in respect of the financial year ended 30 June 2002,
payable to all shareholders registered at the close of business on the record
date.
To comply with the requirements of STRATE, the following dates are applicable:
Last day to trade cum-dividend Friday, 13 September 2002
Trading ex-dividend commences Monday, 16 September 2002
Record date Friday, 20 September 2002
Day of payment Monday, 23 September 2002
Share certificates may not be dematerialised from Monday 16 September 2002 to
Friday 20 September 2002, both days inclusive.
PROSPECTS
The group enters the new financial year with a sharper focus to create a client
centric organisation and in this manner develop Appleton into one of South
Africa`s leading private wealth management businesses. This will be achieved as
follows:
Utilising our recently installed advanced client relationship management
system to further understand our clients particular needs and profiles;
Through ongoing upskilling and training our client relationship and financial
planning staff;
Developing additional new products that meet client specific needs and
establishing best of breed product alliances to ensure that we are able to offer
our clients comprehensive investment solutions; and
Strengthening our global asset management team in order to capitalise on the
collective skill and knowledge of our asset managers.
Finally, the directors would like to extend their gratitude to the loyal staff
and clients of Appleton, without whom these results could not have been
achieved.
On behalf of the Board
C HULTZER D B SNEDDON
Chairman Chief Executive Officer
Cape Town
29 August 2002
Directors: Executive: W Rosenberg (Deputy Chairman), D B Sneddon (CEO),
M I F Smith (Financial), A H Diem
Non-Executive: C Hultzer (Chairman), S D Shane, D de Klerk, B Biebuyck
(Alternate)
Company secretary: C M Mason
Registered office: T.A.G House, Alphen Park, Constantia Road, Constantia, 7806
Registration No: 1999/004031/06
Share code: ALE
ISIN number: ZAE000027488
Appleton offices: Cape Town, Dublin, Durban, Johannesburg, Guernsey, London,
Port Elizabeth
Transfer secretaries: Computershare Investor Services Limited, 11 Diagonal
Street, Johannesburg, 2001
Website address: www.appleton.com ww.appletonglobal.com
www.appletononline.co.za
Date: 29/08/2002 09:42:00 AM Produced by the JSE SENS Department
