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LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED - Interim Results
LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED
("lyons")
(Incorporated in the Republic of South Africa)
(Registration number 1997/022117/06)
Share code: LYS
ISIN: ZAE000024709
INTERIM RESULTS FOR LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED ("LYONS")
ABRIDGED GROUP BALANCE SHEETS
as at 30 November 2003
30 Nov 2003 30 Nov 2002 31 May 2003
Reviewed Unaudited Audited
Note R`000"s R`000"s R`000"s
ASSETS
Non-current assets
- Property and
equipment 1,267 1,840 1,435
- Investment in
associate company 1 15,442 31,098 8,913
- Employee share trust
loan - 1,212 811
- Intangible assets 130 6,137 139
Total non-current
assets 16,839 40,287 11,298
Current assets 1,408 15,744 3,211
Total assets 18,247 56,031 14,509
EQUITY AND LIABILITIES
Capital and reserves (8,069) 34,567 (13,314)
LIABILITIES
Non-current liabilities 14,998 11,610 10,630
Current liabilities 11,318 9,854 17,193
Total liabilities 26,316 21,464 27,823
Total equity and
liabilities 18,247 56,031 14,509
Net asset value per
share (cents) (2.1) 9.1 (3.5)
GROUP INCOME STATEMENTS
for the 6 months ended 30 November 2003
30 Nov 2003 30 Nov 2002 31 May 2003
(6 months) (6 months) (12 months)
Note Reviewed Unaudited Audited
R`000"s R`000"s R`000"s
Revenue 6,274 17,014 12,038
- continuing operations 6,274 16,995 12,038
- discontinuing
operations - 19 -
(Loss)/Profit from
operations (10,068) 3,386 (21,397)
- continuing operations (10,068) 5,827 (21,397)
- discontinuing
operations - (2,441) -
Amortisation of
intangibles (9) (336) (1,534)
Discontinued operations - (593) (622)
Impairments - (2,190) (10,660)
Net finance costs
(932) (567) (3,924)
Share of associate
company
attributible
earnings/(losses) 9,011 5,478 (6,742)
Net (loss)/profit
before taxation (1,998) 5,178 (44,879)
Taxation (7,243) 2,222 46
Net profit/(loss)
after taxation 5,245 2,956 (44,925)
Earnings per share
(cents) 2
Earnings/(loss) per
share
1.38 0.78 (11.81)
Headline
(loss)/earnings per
share (1.85) 0.68 (7.32)
Shares in issue 380,419,350 380,419,350 380,419,350
GROUP STATEMENTS OF CHANGES IN EQUITY
for the 6 months ended 30 November 2003
Non-
Share Share distributable Accumulated
capital premium reserve loss Total
R`000"s R`000"s R`000"s R`000"s R`000"s
Balance
at 31
May 2002 39 6,979 1,299 25,794 34,111
Release
of
reserve - - (1,299) 1,299 -
Shares
to be
issued
re
acquisit
ion of
business
now
cancelled (1) (2,499) - - (2,500)
Net loss
for the
year - - - (44,925) (44,925)
Balance
at 31
May 2003
(audited) 38 4,480 - (17,832) (13,314)
Net
profit
for the
period - - - 5,245 5,245
Balance
at 30
November
2003
(reviewed) 38 4,480 - (12,587) (8,069)
ABRIDGED GROUP CASH FLOW STATEMENTS
for the 6 months ended 30 November 2003
30 Nov 2003 30 Nov 2002 31 May 2003
Reviewed Unaudited Audited
R`000"s R`000"s R`000"s
Operating activities 1,633 (1,542) (18,676)
- continuing operations 1,633 899 (18,676)
- discontinuing operations - (2,441) -
Investing activities (9,477) (6,755) 5,148
- continuing operations (9,477) (3,865) 5,148
- discontinuing operations - (2,890) -
Financing activities 3,930 8,412 5,766
(Decrease)/increase in cash and
cash equivalents (3,914) 115 (7,762)
Cash and cash equivalents at
beginning of year (1,915) 5,847 5,847
Cash and cash equivalents at
end of year (5,829) 5,962 (1,915)
Notes to the abridged group financial statements
for the 6 months ended 30 November 2003
Note 1 Investment in associate
30 Nov 2003 31 May 2003
Reviewed Audited
R`000"s R`000"s
Net asset value on acquisition 18,183 18,183
Negative goodwill (5,265) (5,265)
Cost of investment 12,918 12,918
Share of post acquisition attributible earnings 10,451 1,440
23,369 14,358
Less: loan from associate
(7,927) (5,445)
15,442 8,913
Note 2 Headline earnings and earnings per share
(Restated in terms of Circular 7/2002:
Headline earnings)
30 Nov 2003 30 Nov 2002 31 May 2003
Reviewed Unaudited Audited
R`000"s R`000"s R`000"s
Basic earnings (loss) 5,245 2,956 (44,925)
Amortisation of intangibles 9 336 1,534
After tax closure costs re
discontinued investment - 415 -
Impairments - 2,190 10,660
Share of associate company fair
value adjustment,
after tax (12,307) (3,890) 4,787
Discontinued operations - 593 622
Profit on sale of property and
equipment - - (532)
Headline (loss)/earnings (7,053) 2,600 (27,854)
ACCOUNTING POLICIES
Lyons prepares its financial statements on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice. The accounting policies used are consistent with those used in the
comparative period and the annual financial statements for the year ended 31 May
2003, with the exception of the adoption of Accounting Statement AC133:
Recognition and Measurement of Financial Instruments. The adoption of this
standard has not had an impact on the reported results.
Lyons" auditors, Deloitte & Touche, have reviewed the interim results and their
review opinion is available for inspection at Lyons" registered office.
INDEPENDENT AUDITORS" REVIEW OPINION
The following paragraph represents an emphasis of matter included in the review
opinion of the independent auditors:
"Without qualifying our review opinion, we draw attention to the paragraph
headed "going concern" in the commentary to the interim results, which indicates
that liabilities exceeded assets by R 8million at 30 November 2003.
This condition and the outcome of the proposed transaction disclosed as
"subsequent events" in the commentary to the interim results represents a
material uncertainty that may cast doubt on the ability of Lyons to continue as
a going concern in the foreseeable future."
OPERATIONAL REVIEW
During late 2002 and early 2003, the share price of Lyons dropped dramatically
on the news of a number of senior staff leaving the firm and a material change
in the leadership and strategic direction of the company.
Shareholders grouped together and suggested a plan of action that included
meeting with the Board of Directors to discuss operational concerns. With the
majority of shareholders" support, new management were installed with the
specific task of right-lining and re-directing the business.
Icarus Nominees (Pty) Ltd ("Icarus"), a major shareholder led by founder Garry
Fromentin and Glenn Eccles, made a bid to acquire the entire issued share
capital of the company under a Section 440K offer.
Management"s view was to consolidate operations, invest in new leadership and
restructure the group"s associate company, the Lyons Corporate Lease Fund ("the
Fund"), a real estate investment fund focusing on corporate real estate.
Management considered that the restructuring of the Fund during the reduction of
interest rates over the past 12 months would significantly enhance the value in
this investment.
Icarus has invested fresh capital into the business in order to allow for the
conclusion of the restructuring of its investments as well as initiate new
business. The interim results show the assistance outside the corporate action
costs to 30 November 2003.
HISTORIC ISSUES AFFECTING FINANCIAL PERFORMANCE
Management felt it prudent to set out briefly their views on why the financial
performance over the last period has been less than satisfactory. The major
factors affecting performance were:
*£ Non-core assets acquired by Lyons drained cash through loss making and poor
strategic management.
*£ Poor financial management reporting and administration.
*£ Costly staff retrenchments preparing the company for an aborted Leveraged
Buy-out. Free cash flow could not support the transaction.
*£ Assets acquired for the Fund during the first half of 2003 were earnings and
net asset value dilutive and cash flow negative. Lyons supported these
investments during the period.
The restructuring set out inter alia, to address these issues, and the results
are very positive.
GOING CONCERN
Lyons achieved attributable earnings of R 5million during the current period,
which reduced the net equity deficit to R 8million at 30 November 2003. The
Board of Directors consider Lyons to be a going concern subject to the
satisfactory outcome of the proposed transaction discussed below.
SUBSEQUENT EVENTS AND CURRENT LITIGATION
The company has been investigating a number of ways of extracting value from its
investment in the Fund post it"s restructuring of the asset and liability
durational mismatch.
Shareholders are advised of the cautionary announcement dated 26th March 2004
where it was announced that Growthpoint Properties Limited and Metboard
Properties Limited proposed offers to acquire a portfolio of properties from the
Fund and that the Lyons Board of Directors is in the process of evaluating
the terms of the proposed transactions.
Lyons is in the process of delisting from the JSE Securities Exchange South
Africa. The expected date of delisting will be from commencement of business on
Tuesday 25 May 2004.
During the reporting period, Lyons entered into various legal actions on behalf
of its shareholders, Lyons, subsidiaries and associates. They include, but are
not limited to a restitution action to recover sums of money paid to vendors of
the THORT (Pty) Ltd business purchased by Lyons, recover and settle monies from
previous employees regarding outstanding PAYE claims and recover funds paid out
for shares sold in terms of the Icarus offer.
Signed on behalf of the Board of Directors:
Des Magua Glenn Eccles 31 March 2004
Registered address: Lyons Place, 10 Benmore Road, Morningside, Sandton *£
Postal address: PO Box 87621, Houghton, 2041 *£ Telephone: +27 11 324 2000 *£
Fax: +27 11 324 2001 *£ www.lyons.co.za
Transfer Secretaries: Computershare Limited, Ground floor, 70 Marshall Street,
Johannesburg, 2001
Board of Directors: Mr P Gray (Chairman), Mr G Eccles (Chief Executive), Mr D
Magua (Chief Operating Officer), Mr G Fromentin, Mr L Steenkamp , Mr L Ncwana*
*Non-Executive
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
ICARUS
INVESTMENTS
ENGINEERED THOUGHT
Date: 31/03/2004 04:51:11 PM Produced by the JSE SENS Department
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