| Tue 18 Apr 2006, 16:00 | | Arch Equity Limited - Abridged audited financial s |
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ACH
ACH
Arch Equity Limited - Abridged audited financial statements for the year ended
28 February 2006
Arch Equity Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/004019/06)
Share code: ACH & ISIN: ZAE000061073
("Arch Equity" or "the company")
Highlights
Headline earnings increased by 69%
Net asset value per share increased by 75%
Successful BEE restructuring
Abridged audited financial statements for the year ended 28 February 2006
Group income statement
2006 2005
Year ended 28 February R"000 R"000
Other income 3 388 1 412
Investment income (note 2) 28 851 79 956
Gross profit from trading operations 1 299 2 910
Operating income 33 538 84 278
Expenses (7 149) (6 294)
Operating profit 23 389 77 984
Financing costs (7 152) (3 918)
Income from associated companies (note 3) 143 073 16 450
Profit before income tax 162 310 90 516
Taxation (1 194) (9 348)
Profit for the group 161 116 81 168
Attributable to:
Equity holders of the company (note 5) 161 396 81 136
Minority interest (280) 32
161 116 81 168
Headline earnings reconciliation:
Attributable to ordinary shareholders 161 396 81 136
Goodwill impairment - (1)
Non-headline profit on sale of investments (11 751) -
Non-headline items of associated companies (11 713) 510
Headline earnings 137 932 81 645
Group balance sheet
2006 2005
As at 28 February R"000 R"000
Property, plant and equipment 161 246
Investment in associated companies (note 4) 507 938 244 100
Loans and advances 8 960 -
Deferred income tax asset - 764
Other investments 26 815 1
Trade and other receivables 93 1 929
Cash and short-term funds - 66 295
Total assets 543 967 313 335
Share capital and premium 237 243 166 512
Other reserves 643 -
Retained earnings 236 791 81 136
Ordinary shareholders" funds 474 677 247 648
Minority interest - 348
Total shareholders" funds 474 677 247 996
Borrowings 54 721 50 147
Deferred income tax liability 7 843 9 924
Trade and other payables 352 2 745
Bank overdraft 6 374 -
Derivative financial instrument - 2 523
Total liabilities 69 290 65 339
Total liabilities and shareholders" funds 543 967 313 335
Statement of changes in equity
2006 2005
Year ended 28 February R"000 R"000
Attributable to equity holders of the group at 247 996 -
beginning of period
Shares issued and costs 70 957 166 512
Treasury stock acquired (226) -
Distribution to shareholders (5 741) -
Employee share option scheme 643 -
Movement in minority interest (348) 348
Attributable earnings for the period 161 396 81 136
Attributable to equity holders of the group at 474 677 247 996
end of period
Group cash flow statement
2006 2005
Year ended 28 February R"000 R"000
Cash flows from operating activities 9 636 4 167
Cash flows from investing activities (147 771) (152 315)
Cash flow from financing activities 65 466 214 443
Ordinary shares issued 70 932 166 512
Ordinary dividends paid (5 745) -
(Redemption)/Issue of preference shares (10 723) 20 497
Raising of secured loans 11 002 27 434
Cash (utilised)/generated during period (72 669) 66 295
Cash at beginning of period 66 295 -
Cash at end of period (6 374) 66 295
Per share data
Year ended 28 February 2006 2005
Number of shares (`000)
In issue (net of treasury shares) 157 334 143 629
Weighted 144 045 82 790
Diluted weighted 146 553 83 290
Net asset value per share (cents) 302 172
Period end share price (cents) 820 225
Earnings per share (cents) 112 98
Diluted earnings per share (cents) 110 97
Headline earnings per share (cents) 96 99
Diluted headline earnings per share (cents) 94 98
Notes
1. Basis for preparation
The results for the period 28 February 2005 have been restated for
International Financial Reporting Standards ("IFRS").
The consolidated financial statements have been prepared in
accordance with IFRS. The consolidated financial statements have
been prepared under the historical cost basis, as modified by the
revaluation of financial assets and financial liabilities at fair
value through profit or loss.
The financial statements were prepared in accordance with South
African Statements of Generally Accepted Accounting Principles
("GAAP") until 28 February 2005. GAAP differs in some areas from
IFRS. In preparing these financial statements, management has
amended certain accounting, valuation and consolidation methods
applied in the GAAP financial statements to comply with IFRS. The
comparative figures in respect of 2005 were restated to reflect
these adjustments.
The unqualified audit report from PricewaterhouseCoopers Inc. on
the annual financial statements for the year ended 28 February
2006, including the abridged audited financial statements, is
available for inspection at the registered offices of the company.
2006 2005
Year ended 28 February R"000 R"000
2. Investment income
Fair value gains - PSG Group Limited - 36 729
Fair value gains - Capitec Bank Holdings - 39 431
Limited
Fair value gains - JSE Ltd (173 000 shares) 12 390 -
Dividends received 2 479 3 746
Realised profit on sale of investments 13 759 -
Other 223 50
28 851 79 956
3. Income from associated companies
PSG Group Limited 95 853 9 179
Capitec Bank Holdings Limited 19 747 3 707
Arch Equity Investment Holdings (Pty) Ltd 16 937 -
Associates disposed of during the year 10 536 3 564
143 073 16 450
4. Investment in associated companies
PSG Group Limited 180 989 113 691
Capitec Bank Holdings Limited 235 970 109 984
Arch Equity Investment Holdings (Pty) Ltd 90 979 -
Associates disposed of during the year - 20 425
507 938 244 100
5. Reconciliation of previous SA GAAP to IFRS
Total equity at the end of the period - SA GAAP 249 532
Adjustments:
Share Option Exspense (114)
Impact of IFRS on equity accounted earnings (1 422)
Total equity at the end of the period - IFRS 247 996
Financial performance
Arch Equity had another satisfactory year and the directors believe that it
achieved its primary goal of increasing shareholder wealth.
Headline earnings increased by 69% to R137,9 million due to a strong performance
from the company"s underlying investments, especially its investment in PSG
Group. This performance, combined with the fact that the company issued 13,8
million new shares at R5,14 (listing price R1,80), ensured that the net asset
value per share increased significantly by 75% to R3,02.
Restructuring
In December 2005 Arch Equity announced its restructuring to ensure compliance
with the BEE Codes of Good Practice ("the Codes"). Refer to the SENS
announcement of 9 December 2005 for more details on the restructuring.
At 28 February 2006 Arch Equity had sold 20,1% of the shares in Arch Equity
Investment Holdings (Pty) Ltd (`Investment Holdings") to black shareholders.
Subsequent to year-end, an additional 30,0% stake in Investment Holdings has
been sold to various broad-based black groups, bringing the total black
shareholding in Investment Holdings to 50,1%. The black shareholders" shares are
unencumbered and the shares carry full equity and voting rights. On the basis of
this structure, Investment Holdings has been confirmed as a black company in
terms of the Codes by the Department of Trade and Industry.
Underlying investments
Arch Equity group (including Investment Holdings) made seven new investments
during 2006 as well as increasing its stake in Capitec substantially. The
company sold its investment in Channel Life for R26,6 million to PSG Group
following the acquisition by Sanlam of a controlling stake in Channel Life. The
directors believe that the current investment portfolio is well positioned to
continue to create value for shareholders in the years ahead.
PSG Group Limited (21,1%)
Refer to results in the press or on SENS.
Capitec Bank Holdings Limited (18,3%)
View Capitec"s results on www.capitecbank.co.za
Arch Equity Investment Holdings (Pty) Ltd (49,9%)
Investment Holdings" portfolio includes the following investments:
PSG Group Limited (3,1%)
Capitec Bank Holdings Limited (0,2%)
Investment Holdings will increase this stake during the 2007 financial year.
Unitrans Limited (4,5%) (indirect via Fundiswa Investments)
View Unitrans" results on www.unitrans.co.za
Orion Telecom Holdings (Pty) Ltd (30%)
Orion is a premier player in the least-cost routing market in South Africa and
reported headline earnings of R46,4 million for the year ended 28 February 2006.
Orion specialises in the provision of niche telecoms services to the corporate
and public sectors. The company has a number of blue-chip corporates, government
departments and parastatals amongst its client base.
Indevco Holdings (Pty) Ltd (29,4%)
For the year ending 28 February 2006 Indevco reported headline earnings of R5,7
million. Indevco provides consultancy and other associated services relating to
investment and export incentive programmes administered by the Department of
Trade and Industry, as well as customs-related matters such as the reclaiming
(and trading) of customs and excise rebates.
Grainco (Pty) Ltd (25,1%)
For the year ended 30 September 2005 Grainco reported headline earnings of R3,4
million. Grainco is a grain trading company dealing in grain commodities,
including wheat, maize, sunflower seeds, canola, etc. The company manages the
supply chain between producer and manufacturer, including the purchasing of
commodities from producers, managing and storage of products. Grainco owns a 50%
share in Silobags SA. This company is currently revolutionising the storage of
grain commodities in SA.
BKB Limited (5%)
At 28 February 2006 the market value of the BKB investment was R2,4 million. BKB
is a former agricultural cooperative that specialises in the handling and
marketing of agricultural products such as wool, as well as the provision of
farming supplies and rendering of services peripheral to these activities. The
company has a 70% market share in wool and mohair trading, as well as an
extensive industrial property portfolio. It also focuses on livestock
auctioneering and the provision of niche financial services to the farming
community.
Value Furnishers (Pty) Ltd (85%)
Value Furnishers has 15 furniture retail outlets primarily in the Gauteng and
Port Elizabeth regions. The company focuses on the LSM 1-4 market segments.
Investment Holdings has invested a net amount of R10 million to acquire an 84,7%
share in Value Furnishers. The balance of 15,3% is held by the senior management
of Value Furnishers. It is the company"s intention to expand its number of
retail outlets over the next financial year.
Big Box Containers (Pty) Ltd (30%)
Big Box specialises in the sale and lease of cargo containers in the domestic
market and reported headline profits of R1,8 million for the year ending 28
February 2006.
Compress Publications Management (Pty) Ltd (75%)
Compress is a publications management company offering a full range of
publishing management solutions. Compress recently employed a reputable team of
corporate publications specialists, to expand the service offering to corporate
clients. As a leading BEE company in this field, management is confident that
Compress will be able to take advantage of BEE procurement opportunities.
JSE Limited (4%)
At year-end Investment Holdings held 104 900 JSE shares. Following year-end it
increased its stake to 352 900 shares, which included the purchase of 173 000
shares from Arch Equity at market price.
Curamelior Health Risk Management (Pty) Ltd (30%)
Curamelior is a managed healthcare organisation, providing capitation products
as well as internet-based healthcare transaction services.
The merger with PSG
Shareholders are referred to the joint cautionary announcement with PSG Group of
14 February 2006 and the renewed cautionary announcement dated 30 March 2006
regarding the proposed merger between PSG Group and Arch Equity. Shareholders
are advised that progress is being made with the transaction and that a further
announcement will be made to shareholders in due course.
Proposed dividend
The directors propose a dividend of 17,5 cents per share, subject to approval by
shareholders at Arch Equity"s second Annual General Meeting.
To comply with the requirements of STRATE, the following dates are applicable:
Last day to trade cum dividend Friday, 30 June 2006
Trading ex dividend commences Monday, 3 July 2006
Record date Friday, 7 July 2006
Date of payment Monday, 10 July 2006
Share certificates may not be dematerialised or rematerialised between Monday
3 July 2006 and Friday 7 July 2006, both days inclusive.
On behalf of the board
Desmond Lockey Piet Mouton
Executive chairman Financial director
Directors
Desmond Lockey (Chairman)*, Shameema Cassiem*, Piet Mouton*,
Japie Moropa, Jannie Mouton (*Executive)
Company secretary
Tonie Fuchs
Registered office
Inanda, 6 Dorp Street, Stellenbosch, 7600
PO Box 2292, Stellenbosch, 7601
Transfer secretaries
Ultra Registrars (Pty) Ltd
Registration Number 2000/007239/07
5th Floor, 11 Diagonal Street, Johannesburg, 2001
Designated advisor
PSG Capital Limited
(Registration number: 2002/017362/06)
18 April 2006
Warning: The listing of ordinary shares in the company is on ALTx. Investors are
advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Advisor, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Advisor, it must make arrangements to appoint a new Designated Advisor within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Advisor is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
Date: 18/04/2006 04:00:38 PM Produced by the JSE SENS Department
