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Imara Holdings (Botswana) HY 2013 financial results

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Imara Holdings (Botswana) HY 2013 financial results

Imara Holdings (Botswana) HY 2013 financial results

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  • 1. IMARA HOLDINGS LIMITED ANNOUNCEMENT OF UN-AUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2012 ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Un-audited Six months ended 31 October 2012 Pula Un-audited Six months ended 31 October 2011 Pula Period on period change % Audited Year ended 30 April 2012 Pula Revenue 60,397,426 52,025,964 16% 122,482,705 Other operating income 7,387,200 7,748,170 (5%) 14,959,533 Total income 67,784,626 59,774,134 13% 137,442,238 Cost of services sold (8,908,079) (11,517,377) (23%) (24,385,406) Operating expenses (63,745,701) (46,058,170) 38% (105,924,930) Operating (loss) / profit (4,869,154) 2,198,587 (321%) 7,131,902 Finance costs (256,762) (126,471) 103% (510,042) Share of profits from associates 1,133,452 2,105,218 (46%) 1,849,528 (Impairment losses) /Reversal of impairment losses on investments in associates (190,317) 211,936 (190%) 32,031 (Loss) / profit before tax for the period / year (4,182,781) (4,389,270) (195%) 8,503,419 Income tax expense (937,726) (913,022) 3% (3,741,781) (Loss) / profit for the period / year (5,120,507) 3,476,248 (247%) 4,761,638 Other comprehensive (loss) for the period / year, net of tax (3,806,088) (1,708,527) 123% (1,027,438) Total comprehensive (loss) for the period / year, net of tax (8,926,595) 1,767,721 (605%) 3,734,200 (Loss) / profit for the period / year - attributable to: Equity holders of the parent (4,268,669) 3,938,024 (208%) 5,635,305 Non-controlling interest (851,838) (461,776) 84% (873,667) Total comprehensive (loss) / income for the period / year, net of tax (5,120,507) 3,476,248 (247%) 4,761,638 Total comprehensive (loss) / income for the period / year - attributable to: Equity holders of the parent (8,074,757) 2,229,497 4,607,867 Non-controlling interest (851,838) (461,776) (873,667) (8,926,595) 1,767,721 3,734,200 EARNINGS PER SHARE: Earnings per share - Basic thebe (0.073) 0.068 (14.12) Earnings per share - Diluted thebe (0.073) 0.064 (14.12) ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Un-audited As at 31 October 2012 Pula Un-audited As at 31 October 2011 Pula Change % Audited As at 30 April 2012 Pula ASSETS Non-currrent Assets Equipment 5,350,203 3,119,413 5,686,468 Goodwill 548,770 524,865 553,460 Intangible assets 24,269 145,680 50,813 Investment in associate 11,584,384 14,847,765 9,557,712 Available-for-sale-financial assets 18,622,199 9,230,693 17,866,934 Deferred tax asset 2,341,462 3,284,134 2,341,462 38,471,287 31,152,550 23% 36,056,849 Current Assets Listed trading securities 19,914,752 14,680,379 6,408,778 Trade and other receivables 136,512,710 202,951,685 71,647,525 Cash and cash equivalents 50,662,355 85,214,990 84,571,232 Tax refundable 690,478 636,252 1,237,011 207,780,295 303,483,306 (32%) 163,864,546 TOTAL ASSETS 246,251,582 334,635,856 (26%) 199,921,395 EQUITY AND LIABILITIES Equity Stated capital 50,914,889 49,020,274 50,914,889 Non-distributable reserves 12,195,667 17,610,086 14,706,691 Distributable reserves 66,066,346 68,776,701 72,109,221 Total shareholders equity 129,176,902 135,407,061 (5%) 137,730,801 Non controlling interest 4,938,334 1,997,640 5,790,172 Total equity 134,115,236 137,404,701 (2%) 143,520,973 Non - current Liabilities Interest bearing loans and borrowings 2,496,789 1,886,213 Deferred taxation 3,400,097 1,065,478 3,568,992 5,896,886 1,065,478 453% 5,455,205 Current Liabilties Trade, other payables and provisions 90,365,933 186,095,380 46,794,659 Listed trading securities sold short 12,510,046 6,397,492 439,621 Interest bearing loans and borrowings 3,329,931 3,397,336 3,486,053 Income tax payable 33,550 275,469 145,244 Bank overdraft - - 79,640 106,239,460 196,165,677 (46%) 50,945,217 Total liabilities 112,136,346 197,231,155 56,400,422 TOTAL EQUITY & LIABILTIES 246,251,582 334,635,856 (26%) 199,921,395 ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOW: Un-audited Six months ended 31 October 2012 Pula Un-audited Six months ended 31 October 2011 Pula Audited Year ended 30 April 2012 Pula (Loss) / profit from operating activities (4,182,781) 4,389,270 8,503,421 Adjustment to operating profit (5,323,347) (8,561,298) (7,799,610) Operating cash flows before working capital changes (9,506,128) (4,172,028) 703,811 Working capital changes (22,729,458) (11,681,694) (16,640,722) Income tax paid (671,781) (1,341,889) (3,827,666) Interest received 1,893,579 1,798,038 3,953,775 Finance costs (256,762) (126,471) (510,042) Net cash flows from operating activities (31,270,550) (15,524,044) (16,320,844) Cash flows from investing activities (2,248,795) (673,836) (1,864,651) Cash flows from financing activities (1,163,633) 345,747 1,932,294 Net Increase in cash and cash equivalents (34,682,978) (15,852,133) (16,253,201) Cash and cash equivalents at the beginning of the period / year 84,491,592 98,187,125 98,187,125 Exchange rate differences on cash and cash equivalents 853,741 2,879,998 2,557,668 Cash and cash equivalents at the end of the period / year 50,662,355 85,214,990 84,491,592 Analysed as follows: Cash equivalents & short term investments 50,662,355 85,214,990 84,571,232 Short term investments - - (79,640) Net cash and cash equivalents 50,662,355 85,214,990 84,491,592 ABRIDGED STATEMENT OF CHANGES IN EQUITY As at 31 October Stated capital Non-distributable reserves Distributable reserves Non controlling interest TOTAL Balance at 1 May 2011 48,532,981 19,318,613 65,169,033 2,459,416 135,480,043 Total comprehensive income - (1,027,438) 5,635,305 (988,874) 3,618,993 Movement for the year 2,381,908 (3,584,484) 1,304,883 4,319,630 4,421,937 Balance at 30 April 2012 50,914,889 14,706,691 72,109,221 5,790,172 143,520,973 Balance at 1 May 2012 50,914,889 14,706,691 72,109,221 5,790,172 143,520,973 Total comprehensive income - - (4,268,667) (851,838) (5,120,505) Dividend paid - - (1,774,208) - (1,774,208) Movement for the year - (2,511,024) - - (2,511,024) Balance at 30 October 2012 50,914,889 12,195,667 66,066,346 4,938,334 134,115,236 COMPARATIVE FINANCIAL INFORMATION - IMARA CAPITAL ZIMBABWE The figures relating to October 2012 and October 2011, are not directly comparable owing to the consolidation of Imara Capital Zimbabwe (Private) Limited (“Imara Zimbabwe”) with effect from 1 November 2011. Prior to this date Imara Zimbabwe was treated as an associate company using the equity method of accounting.The figures reported for October 2012 therefore include Imara Zimbabwe whereas for the period to October 2011 this company was excluded. The impact of Imara Zimbabwe on the reported results is detailed in the Commentary section below. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The consolidated financial statements of the Group have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS), which comprise standards approved by the International Accounting Standards Boards, (IASB), and interpretations approved by the International Financial Reporting Interpretations Committee, (IFRIC), and the applicable requirements of the Botswana Companies Act, 2003. The financial statements have been prepared on an historical cost basis except for certain financial instruments that are carried at fair value. COMMENTARY In the 2012 Annual Report, comment was made that the 2012-2013 financial year had started slowly and that the operating environment remained difficult. It was however hoped that the growing interest in Africa would result in increased investment flows which would positively impact the Imara Group. Against this background the Group anticipated that it would deliver profits for the current financial year. The interim results for the six months ended 31 October 2012 are therefore particularly displeasing, reflecting a loss after tax of P5.12 million, attributable losses of P4.27 million and a total comprehensive loss of P 8.93 million. Traditionally financial results for the Group are slower in the first half of the year as compared to the second half year, but what is of concern to the Board is the magnitude of the loss for the first six months of the current financial year and it’s continued impact on the Group’s cash-flow position. A slowdown in stockbroking activity across the region, a decline in funds under management in the earlier part of the year, and the perennial long lead time for closure of corporate advisory mandates all contributed to the decline in profitability. Total income for the period, exclusive of associate companies, was P67.78 million up 13% on P59.77 million for the corresponding prior year period. Total expenses have escalated by 26% from P57.70 million in 2011 to P72.91 million in 2012. At first glance these trends appear alarming but the numbers being reported are heavily distorted by Imara Zimbabwe, which was consolidated from 1st November 2011, as described above. Adjusting for Imara Zimbabwe, total income for the six months to October 2012 would be P53.26 million, down 11% on the comparative period for 2011 and total expenses would be P59.33 million, up 3% on 2011, which is well within current inflation levels. All associate companies were profitable for the period under review with the share of profits from associates amounting to P1.13 million. This was lower than the reported P2.10 million for the corresponding prior period, but this amount included P664 565 in respect of Imara Zimbabwe. As a direct result of the devaluation of the Malawi Kwacha, which declined by around 80% on a year on year basis, the carrying value of the investment in Stockbrokers Malawi has been impaired by P190 317. Cash-flow trends continue to be a concern with the year-to- date position being negative by P34,68 million of which P22.73 million relates specifically to working capital movements. In the main, this is attributable to the cut off procedures adopted at year end April 2012 relating to the Futures Desk in South African, which were closed out in their entirety over the year- end date and then re-instated in the new financial year. The trend in cash-flow is also the result of a deliberate strategy of utilizing cash reserves to fund the Group’s expansion without resorting to high cost borrowings. This strategy will need to be revisited in the coming months to determine its sustainability. The Statement of Financial Position reflects significant changes since April 2012 impacted mainly by items relating directly to the Futures Desk as commented on previously. The Zimbabwe effect on the Statement of Financial Position is different to the Statement of Comprehensive Income in that for the Statement of Financial Position and hence the cash flow, movements are reported from the April 2012 year-end reporting date. An item to be highlighted is the Investment in Associate, which reflects a decrease of P2.02 million since April 2012. This is the net effect of the removal of Imara Zimbabwe as an associate following its consolidation, and the acquisition of an additional 5% equity tranche in Imara Beresford International Limited (“Imara Beresford”). Subsequent to the 31 October 2012 reporting date, the Group has negotiated the acquisition of a further 10.99% equity stake in Imara Beresford, moving Imara Holdings Limited to a controlling equity stake of 51%. Despite a tremendous amount of work, fund raising for the Batian Private Equity Fund has yielded no real investment inflows and the promoters therefore decided to discontinue this initiative at the end of September 2012. The management company established for the private equity fund, Africa Private Equity Fund Managers (Pty) Limited, was also closed at the end of September 2012 and is in the process of being wound up. The Group continues to move forward with the implementation of a Group Wide Risk Management System and with the group re-organization. Once complete, the group re-organisation will see the de-registration of a number of non-operational subsidiary companies with resultant cost savings, although these savings will only be fully felt in the April 2014 financial year. It is pleasing to report that the impasse with the minority shareholders’ of Imara Asset Management (Pty) Limited in Botswana has finally been resolved and this company has again reverted to 100% Imara ownership and control, allowing for this entity to be closed and de-registered. In an effort to optimize business efficiencies and reduce costs, the operations of Imara Head Office and the Botswana stockbroker, Imara Capital Securities will be consolidated under one roof in new office premises situated in the new CBD of Gaborone with effect from December 2012. OUTLOOK The earnings trend in the months of September and October 2012 has been encouraging, driven primarily by an improved performance in our stockbroking businesses across the region. The Imara Africa Desk is now also starting to make a positive contribution and earnings from the asset management businesses are improving as a result of funds inflows in the later part of the reporting period, accompanied by generally improved market conditions. Budget forecasts for the remainder of the year support the view that these positive trends should continue in the second half of the year with a resultant improved earnings performance. It is however important to remind stakeholders that global market sentiment and perceptions about Africa remain a very strong contributory factor to our overall performance. DIVIDEND DECLARATION No interim dividend has been declared. OFFICE PREMISES Shareholders are advised that with effect from 10 December 2012, Imara Holdings Limited and its subsidiary company Imara Capital Securities (Pty) Limited will move to new office premises siutated at: Unit 6, Second Floor, Morojwa Mews Plot 54365, Western Commercial Road, New CBD Gaborone. Telephone numbers for both businesses will remain unchanged. For & on behalf of the Board of Directors SM Ndoro MJS Tunmer Chairman Chief Executive Officer Transfer Secretaries: Corpserve Botswana First Floor, Block A, Unit 3, Plot 117 Millennium Office Park, GABORONE Telephone 393 2244: email: corpserve@info.bw Directors: SM Ndoro (Chairman), MJS Tunmer (Chief Executive Officer), AR Fleming, GE Johns, JR Legat, ACH Mackeurtan, RH Macleod, TJ Matsau, GZ Steffens, DE Stone. The Directors of Imara Holdings Limited have pleasure in announcing the un-audited consolidated financial results of the Group for the six months ended 31 October 2012