| Thu 10 Apr 2003, 8:34 | | Corpcapital Limited - Unaudited Interim Results Fo |
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CORPCAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1983/011384/06)
(Share Code - CPA ISIN Code - ZAE000033965)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2003
* BANK LICENCE RELINGUISHED AND DEPOSITORS REPAID.
* PAID R242 MILLION IN CASH TO SHAREHOLDERS DURING THE PERIOD.
* ADOPTED VALUE UNLOCKING STRATEGY.
* ISSUE OF PAYNE REPORT.
Consolidated income statement 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Revenue 779 484 771 478 1 531 525
Net interest income 13 469 43 073 80 670
Interest received 51 571 91 977 190 655
Interest paid 38 102 48 904 109 985
Specific and general provisions 500 7 860 38 735
Convertible loan interest 51 031 52 947 112 339
Non-interest income 170 425 210 415 367 867
Investing, trading and fee income 115 104 138 617 234 472
Equity accounted income 28 973 29 534 46 536
Contribution from proprietary
consolidated investments 43 329 29 629 74 933
Foreign exchange losses (16 981) 12 635 11 926
Total income 132 363 192 681 297 463
Operating expenses 47 267 70 136 151 099
Profit before taxation and
exceptional items 85 096 122 545 146 364
Goodwill (74 288) (92 411) (223 414)
Exceptional items (2 584) (6 592) (48 663)
Profit before taxation 8 224 23 542 (125 713)
Taxation 15 713 16 035 (64 307)
Normal 15 713 18 170 2 864
Exceptional items - (2 135) (67 171)
Profit after taxation (7 489) 7 507 (61 406)
Attributable to minority shareholders 1 749 4 860 6 574
Attributable profit (9 238) 2 647 (67 980)
Headline earnings adjustments 76 872 96 868 204 906
Headline earnings 67 634 99 515 136 926
Headline earnings per share (cents) 19,8 25,6 36,5
Earnings per share (cents) (2,7) 0,7 (18,1)
Dividend per share (cents) - - 12,5
Special distribution per share (cents) 52,5 - -
Weighted average number of
shares in issue (000) 340 850 388 365 375 431
Analysis of headline earnings adjustments 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Goodwill 74 288 92 411 223 414
Goodwill amortisation 28 999 31 652 104 966
Share of associates" goodwill 2 375 2 386 13 017
Impairment of goodwill 42 914 32 404 94 091
- resulting from foreign exchange movements 24 850 - -
- other 18 064 32 404 94 091
Negative goodwill - 25 969 11 340
Exceptional items 2 584 6 592 48 663
Share of associates" exceptional items (176) 6 592 9 118
Losses on discontinuance of banking activities 2 760 - 39 545
- asset impairments and losses 2 760 - 28 429
- closure costs - - 11 116
Taxation on exceptional items - (2 135) (67 171)
Total headline earnings adjustments 76 872 96 868 204 906
Continuing operations 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Revenue 768 286 724 786 1 461 642
Net interest income 16 674 32 432 58 782
Other income 137 866 143 938 239 449
Foreign exchange losses (12 941) 12 635 11 926
Operating expenses 39 916 36 111 94 143
Profit before taxation and exceptional items 101 683 152 894 216 014
Taxation 15 713 10 454 (1 595)
Headline earnings 84 221 139 275 213 557
Headline earnings per share (cents) 24,7 36,0 56,9
Discontinuing operations 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Revenue 11 198 46 692 69 883
Net interest income (3 205) 10 641 21 888
Other income (1 991) (6 965) (34 582)
Foreign exchange losses (4 040) - -
Operating expenses 7 351 34 025 56 956
Profit before taxation and exceptional items (16 587) (30 349) (69 650)
Taxation - 7 716 4 459
Headline earnings (16 587) (39 760) (76 631)
Headline earnings per share (cents) (4,9) (10,2) (20,4)
Segmental information Profit
before
tax and
R 000"s Total Operating exceptional
income expenses items
Six months to 28 Feb 2003
Continuing operations 141 599 39 916 101 683
Investments and private equity 82 157 6 116 76 041
Property asset management and consulting 35 824 7 854 27 970
Corporate finance 20 012 8 870 11 142
- advisory 9 514
- investing 10 498
Hedge funds and arbitrage 9 578 4 303 5 275
Funding and support (5 972) 12 773 (18 745)
Discontinuing operations (9 236) 7 351 (16 587)
132 363 47 267 85 096
Six months to 28 February 2002
Continuing operations 189 005 36 111 152 894
Investments and private equity 83 943 7 971 75 972
Property asset management and consulting 24 286 6 898 17 388
Corporate finance 14 618 9 947 4 671
- advisory 8 203
- investing 6 415
Hedge funds and arbitrage 16 140 5 431 10 709
Funding and support 50 018 5 864 44 154
Discontinuing operations 3 676 34 025 (30 349)
192 681 70 136 122 545
Consolidated balance sheet 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Assets
Corpcapital 1 409 260 4 057 316 2 501 531
Cash and cash equivalents 143 072 411 322 454 427
Trading assets 202 051 1 495 450 201 954
Advances and other accounts 205 843 536 712 331 001
Financial products assets 230 802 107 046 289 649
Investments 351 349 380 944 331 763
Preference shares - 567 144 616 221
Associates 214 975 491 444 212 857
Deferred taxation 21 500 - 21 500
Property, plant and equipment 39 668 43 599 42 159
Intangibles - 23 655 -
Proprietary consolidated
investments 481 146 421 602 480 953
Cash and cash equivalents (14 163) 23 420 35 884
Trade debtors and other accounts 219 918 172 857 184 334
Inventories 229 871 186 976 214 198
Associates and joint ventures 2 046 1 717 1 673
Property, plant equipment 43 474 36 632 44 864
1 890 406 4 478 918 2 982 484
Equity
Share capital and premium 367 203 598 341 598 341
Retained earnings and reserves 588 376 716 885 638 690
Treasury shares (200 219) (169 476) (229 812)
Ordinary shareholders" equity 755 360 1 145 750 1 007 219
Minority shareholders" interest 8 343 11 631 9 930
Compulsorily convertible loan - 304 114 304 114
Total capital employed 763 703 1 461 495 1 321 263
Policy holders" interests
in Corpcapital Life
Investments, interest-bearing
securities and deposits 3 256 832 1 645 798 1 697 825
Life fund 3 256 832 1 645 798 1 697 825
Liabilities
Corpcapital 923 645 2 821 514 1 420 946
Long-term debt 336 717 44 771 241 080
Short-term debt 118 464 45 182 45 559
Deposits - 1 015 201 255 302
Convertible loan interest - 272 792 339 806
Deferred taxation 37 361 113 688 37 466
Financial products liabilities 230 802 107 046 289 649
Trading liabilities 140 502 1 089 443 138 994
Creditors, provisions and taxation 59 799 133 391 73 090
Proprietary consolidated
investments 203 058 195 909 240 275
Interest-bearing debt 37 064 36 262 33 735
Trade creditors and provisions 159 929 155 224 197 234
Taxation 6 065 4 423 9 306
1 890 406 4 478 918 2 982 484
Net asset value per share (cents) 228,1 260,2 289,2
Total shares in issue excluding
treasury shares (000) 331 091 440 265 348 241
Total shares in issue including
treasury shares (000) 440 265 440 265 440 265
Group statement of changes in equity 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Ordinary shareholders" equity at
beginning of year 1 007 219 1 357 880 1 357 880
Attributable profit (9 238) 2 647 (67 980)
Dividend payments (41 386) (52 832) (52 832)
Distribution of capital (173 822)
Treasury shares bought back
in current year (27 440) - (65 750)
Changes in holding of
consolidated entities - (169 476) (164 062)
Translation gains
and other changes 27 7 531 (37)
755 360 1 145 750 1 007 219
Consolidated cash flow statement 6 Months 6 Months Year
28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Cash generated from operations 35 794 108 281 122 457
Taxation and dividends paid (233 525) (65 120) (79 503)
Reduction in net banking assets (161 737) (83 899) (91 057)
Investing activities (55 578) 32 423 75 431
Shares bought back (27 440) - (65 750)
Movement in proprietary
consolidated investments (37 411) (16 274) (20 723)
Financing activities 168 542 - 77 661
Net movement in cash and
cash equivalents (311 355) (24 589) 18 516
Opening cash and equivalents 454 427 435 911 435 911
Closing cash and equivalents 143 072 411 322 454 427
Notes and supplementary 6 Months 6 Months Year
information 28 Feb 28 Feb 31 Aug
R 000"s 2003 2002 2002
Balance sheet notes investments
Investments 351 349 224 365 331 763
- property investments 138 639 4 739 129 966
- proprietary investments 212 710 219 626 201 797
Associates 214 975 491 444 212 857
- net asset value 168 472 273 701 107 631
- goodwill 46 503 217 743 105 226
Proprietary consolidated
investments 278 088 225 693 240 678
- assets 481 146 421 602 480 953
- liabilities (203 058) (195 909) (240 275)
Portfolio at carrying value 844 412 941 502 785 297
Portfolio at fair value 912 780 993 713 879 816
Contingent liabilities 50 338 80 947 67 170
Income statement notes
Foreign exchange losses (16 981) 12 635 11 926
Investing, trading and fee income (12 198) 7 371 4 749
Equity accounted income (993) - 1 162
Contribution from proprietary
consolidated investments (3 790) 5 264 6 015
COMMENTARY
Major changes in the company"s activities and the reduction of capital
available for income producing activities make it difficult to compare the
results with those for the same period last year.
The Rand"s strengthening adversely affected headline earnings by R29,6
million compared to the same period last year and in addition led to goodwill
impairment of R24,9 million for Cytech.
HEPS declined by 23% to 19,8 cents from 25,6 cents in the comparative six
months, but increased by 82% over the last six months of the previous year.
Excluding currency movements, HEPS increased marginally against the comparative
period and by 127% against the six months ended 31 August 2002.
Net asset value per share has declined to 228,1 cents per share (August 2002:
289,2 cents) mainly as a result of the payment to shareholders of a 12,5 cents
per share dividend and a 52,5 cents per share special distribution.
OPERATIONS
Investments and private equity
As a result of buoyant trading conditions Corpbuild experienced an exceptional
six months, growing turnover by 20% to R489,1 million and profit before tax by
80% to R35 million.
Aqua and Onelogix performed poorly with the latter having now shed all of its
loss making activities. Cytech"s profits declined in difficult conditions and
were adversely affected by the strengthening Rand. The performance of Macadams
was also affected by currency movement due to their high proportion of exports.
The contribution from Clear Channel Independent (formerly Corpcom) declined.
The investment is carried at the minimum price payable in terms of the put
option against Clear Channel Communications and the Independent Group.
The operating activities within Vestacor traded well since acquisition in
December 2002.
Property Asset Management and Consulting
The Property Asset Management & Consulting Division continues to be highly
active with the group"s full support, particularly in the listed property
sector. Together with strong listed unit prices this increased their
contribution for the six months by 61% to R28 million. Assets under management
and joint management grew to R6,5 billion at the end of the period.
Corporate Finance
Fees generated by the Corporate Finance Division rose marginally from the
prior year despite the decline in activity during this calendar year.
With effect from 1 April 2003 the Corporate Finance Division"s advisory services
have been acquired by its executive management. Trading as Java Capital, it will
offer its services to third parties whilst continuing to service the corporate
finance and advisory requirements of the group.
Investments and investment activities formerly undertaken within the
Corporate Finance Division have been assumed by the group.
Hedge Funds and Arbitrage
Hedge Funds and Arbitrage contribution for the period halved from R10,7
million to R5,3 million as a result of the division adopting a much lower risk
profile.
CONTINUING OPERATIONS
The operating performance of continuing operations was satisfactory,
especially when currency movements and the return of capital to shareholders are
taken into account.
Weak market conditions and poor operating performance led to the recognition
of goodwill impairments of R18,1 million and a further impairment of goodwill on
Cytech of R24,9 million resulted from adverse currency movements.
During the period banking activities ceased and all deposits, approximately
R1 billion at February 2002 (August 2002: R255,3 million), were repaid. In
anticipation of the handing back of the licence in November 2002 and the payment
of the special dividend, capital previously employed in high yielding activities
was deployed in low yielding instruments. R242 million was paid to shareholders
by means of a special distribution of 52,5 cents per share, an ordinary dividend
of 12,5 cents per share and the buy back of 17,15 million shares. As a result
income on the employment of capital declined steeply. In addition increased
interest bearing debt and forex losses impacted negatively on earnings on
capital.
In line with the reduced scope of activities group operating expenses for the
six months declined from R70,1 million to R47,2 million. The reduction of
operating expenses will continue.
The group"s investment portfolio (including listed property) had a carrying
value of R844,4 million at February 2003 (August 2002: R785,3 million) and a
fair value of R912,8 million (August 2002: R879,8 million). The only major
acquisition during the period was the acquisition of 48,7% of Vestacor for R82,8
million in December 2002.
POST BALANCE SHEET
The group has disposed of its 30% interest in Norman Bisset & Associates
(Pty) Limited, with effect from 1 March 2003, for a total consideration of R28,7
million (carrying value of R27 million at 28 February 2003). The transaction
remains subject to Competition Board approval.
The group disposed of 7% in Clear Channel Independent by the exercise of its
put option against Clear Channel Communications and the Independent Group for a
consideration of R37,9 million, its carrying value. The proceeds were used to
reduce interest bearing debt.
Agreement has been reached between the group and the management of its Cape
Town office in terms of which certain of the Cape Town activities and related
liabilities are taken over by management, led by Barry Kalkhoven.
STRATEGY
The group is well advanced in the implementation of its strategy to unlock
value for shareholders following a process of responsible, measured and optimal
realisation or distribution of the company"s investments and growth in the
group"s property division.
DIVIDEND
It is not the company"s policy to declare an interim dividend.
PAYNE REPORT
During the period Mr Nigel Payne carried out an investigation at the request
of the board and found that the group"s corporate governance is sound. The
recommendations set out in the Payne report have been implemented.
BOARD CHANGES
Martin Sacks has resigned to pursue investment and business opportunities
outside the group. With effect from 30 June 2003 he will become a non-executive
director serving on the board committee responsible for the implementation of
the revised strategy.
Barry Kalkhoven has resigned as a member of the board.
PROSPECTS
We anticipate difficult market conditions which may have an impact on the
optimal implementation of the group"s strategy. However, some sectors of the
economy in which we are active show good prospects. We shall continue to keep
shareholders informed of our progress in meeting our objectives.
Eric Ellerine Jeff Liebesman
Chairman CEO
Thursday 10 April 2003
Note:
Accounting Policies
The accounting policies used in the preparation of the financial statements
for the six months ended 28 February 2003 comply with South African Statements
of Generally Accepted Accounting Practice and are consistent with those applied
in the previous year.
CORPCAPITAL LIMITED
(Registration number:1983/011384/06)
(Share code - CPA ISIN code - ZAE 000033965)
2 ARNOLD ROAD
ROSEBANK
JOHANNESBURG 2196
PO BOX 471917
PARKLANDS 2121
SOUTH AFRICA: TELEPHONE +27 11 283 0000
TELEFAX +27 11 283 0088
EMAIL info@corpcapital.com
DIRECTORS: E ELLERINE* (CHAIRMAN), J M LIEBESMAN (CEO), M H SACKS (MD),
D L BROOKING*, E GROLMAN, G B LIEBMANN, N N LAZARUS, W H TRENGOVE*,
T A WIXLEY* (*NON-EXECUTIVE)
www.corpcapital.com
