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Imara Holdings (Botswana) HY 2014 financial results


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Imara Holdings (Botswana) HY 2014 financial results

Imara Holdings (Botswana) HY 2014 financial results

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  • 1. IMARA HOLDINGS LIMITED ANNOUNCEMENT OF UN-AUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2013 ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Un-audited Six months ended 31 October 2013 Pula Un-audited Six months ended 31 October 2012 Pula Period on period change % Audited Year ended 30 April 2013 Pula Revenue 92,449,614 60,397,426 53% 145,919,445 12,220,972 7,387,200 65% 18,191,196 Total income 104,670,586 67,784,626 54% 164,110,641 Cost of services sold (10,977,112) (8,908,079) 23% (19,488,607) (84,766,785) (63,745,701) 33% (140,547,968) 8,926,689 (4,869,154) 283% 4,074,066 Finance costs (118,901) (256,762) (54%) (396,768) 310,119 1,133,452 (73%) 1,094,609 Impairment losses on investments in associates (11,563) (190,317) (94%) (1,294,653) 9,106,344 (4,182,781) 318% 3,477,254 Income tax expense (3,207,054) (937,724) 242% (4,977,395) 5,899,290 (5,120,505) 215% (1,500,141) Other comprehensive income / (loss) for the period /year, net of tax 320,160 (2,511,024) 113% (3,409,055) Total comprehensive income / (loss) for the period / year, net of tax 6,219,450 (7,631,529) 181% (4,909,196) Equity holders of the parent 3,149,279 (4,268,667) (4,304,682) Non-controlling interest 2,750,011 (851,838) 2,804,541 Total comprehensive (loss) / income for the period / year, net of tax 5,899,290 (5,120,505) (1,500,141) Equity holders of the parent 3,469,439 (6,779,691) (7,713,737) Non-controlling interest 2,750,011 (851,838) 2,804,541 6,219,450 (7,631,529) (4,909,196) EARNINGS PER SHARE: Earnings per share - Basic thebe 0.054 (0.073) (7.34) Earnings per share - Diluted thebe 0.051 (0.073) (7.34) ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Un-audited As at 31 October 2013 Pula Un-audited As at 31 October 2012 Pula Change % Audited As at 30 April 2013 Pula ASSETS Non-currrent Assets Equipment 5,810,170 5,350,203 6,098,309 Goodwill 12,809,177 548,770 12,813,858 Intangible assets 234,123 24,269 234,533 Investment in associate 1,176,801 11,584,384 877,669 23,262,992 18,622,199 21,180,571 Deferred tax asset 1,040,188 2,341,462 1,033,646 44,333,451 38,471,287 15% 42,238,586 Current Assets 5,110,671 19,914,752 5,276,905 Trade and other receivables 193,740,563 136,512,710 134,346,123 Cash and cash equivalents 78,832,451 50,662,355 69,805,677 Tax refundable 693,027 690,478 804,055 278,376,712 207,780,295 34% 210,232,760 TOTAL ASSETS 322,710,163 246,251,582 31% 252,471,346 EQUITY AND LIABILITIES Equity Stated capital 50,931,011 50,914,889 50,931,011 Non-distributable reserves 12,389,442 12,195,667 12,069,282 Distributable reserves 72,456,024 66,066,346 66,208,347 Total shareholders equity 135,776,477 129,176,902 5% 129,208,640 Non-controlling interest 11,235,589 4,938,334 8,550,953 Total equity 147,012,066 134,115,236 10% 137,759,593 Interest bearing loans and borrowings 2,496,789 2,757,301 535,205 2,412,614 _ _637,311 3,400,097 2,421,586 3,049,925 5,896,886 (48%) 5,714,092 Trade, other payables and provisions 126,437,821 90,365,933 105,102,465 45,152,576 12,510,046 95,169 Interest bearing loans and borrowings 3,329,931 3,295,644 Income tax payable 1,057,775 33,550 502,264 2,119 172,648,172 106,239,460 63% 108,997,661 175,698,097 112,136,346 114,711,753 TOTAL EQUITY & LIABILTIES 322,710,163 246,251,582 31% 252,471,346 ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS: Un-audited Six months ended 31 October 2013 Pula Un-audited Six months ended 31 October 2012 Pula Audited Year ended 30 April 2013 Pula 9,106,344 (4,182,781) 3,477,254 (3,230,987) (5,323,347) (8,662,226) 5,875,357 (9,506,128) (5,184,972) Working capital changes 7,266,664 (22,729,458) (3,424,569) Income tax paid (2,556,029) (671,781) (4,074,483) Interest received 2,714,518 1,893,579 3,532,957 Finance costs (118,901) (256,762) (396,768) 13,181,609 (31,270,550) (9,547,835) 1,262,780 (2,248,795) (3,514,350) (6,246,783) (1,163,633) (2,813,021) Net Increase in cash and cash equivalents 8,197,606 (34,682,978) (15,875,206) Cash and cash equivalents at the beginning of the period 69,803,558 84,491,592 84,491,592 831,287 853,741 1,187,172 Cash and cash equivalents at the end of the period 78,832,451 50,662,355 69,803,558 Analysed as follows: Cash equivalents & short term investments 78,832,451 50,662,355 69,805,677 Short term investments - - (2,119) Net cash and cash equivalents 78,832,451 50,662,355 69,803,558 ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For six months ended 31 October 2013 Stated capital Non-distributable reserves Distributable reserves Non controlling interest TOTAL Balance at 1 May 2012 50,914,889 14,706,691 72,109,221 5,790,172 143,520,973 Total comprehensive income (4,304,682) 2,804,541 (1,500,141) Dividend paid (1,774,209) (1,774,209) Issue of new shares 16,122 16,122 Movement for the year (2,637,409) 178,017 (43,760) (2,503,152) Balance at 30 April 2013 50,931,011 12,069,282 66,208,347 8,550,953 137,759,593 Balance at 1 May 2013 50,931,011 12,069,282 66,208,347 8,550,953 137,759,593 Total comprehensive income 3,149,279 2,750,011 5,899,290 Dividend paid 3,178,966 3,178,966 Movement for the year 320,160 (80,569) (65,375) 174,216 Balance at 30 October 2013 50,931,011 12,389,442 72,456,024 11,235,589 147,012,065 COMPARATIVE FINANCIAL INFORMATION - IMARA BERESFORD INTERNATIONAL LIMITED BASIS OF PREPARATION OF FINANCIAL STATEMENTS COMMENTARY Operating profit / (loss) Profit / (loss) for the period / year - attributable to: Profit / (loss) for the period / year Profit / (loss) before tax for the period / year Non-current Liabilities Profit / (loss) from operating activities _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ On 31 October 2012, Imara Beresford International Limited (“IBIL”) became a subsidiary company of Imara Holdings Limited (“Imara”), following the acquisition of a further 10.99% of the issued equity; this brought Imara’s shareholding to 51%. The figures relating to October 2013 and October 2012 are therefore not directly comparable owing to the consolidation of IBIL with effect from 1 November 2012. Prior to this date IBIL was treated as an associate company using the equity method of accounting. 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. It is pleasing that the Group can report a much improved trading performance for the six months ended 31 October 2013 with profit after taxation of P5.89m. This compares to the loss after tax of P5.12m reported for the corresponding period in the prior year. Also pleasing is the improvement in the Group’s cash-flow position and the fact that in the second quarter of the year, there was the emergence of a trend of more consistent monthly earnings, driven by continuing growth in Imara’s annuity income businesses, namely asset management and trust and administration services. A key feature of the financial results for the period is the inclusion of other operating income of P6.16m. This income is the result of the costs award made by the Arbitration Tribunal in favour of Imara, in respect of the NBS Malawi arbitration process which was been on-going since 2007, and which was finally resolved in September 2013. With all legal costs relating to the arbitration process having been expensed in previous financial years, the amount of the award is a direct addition to bottom line profitability. Results for the period would have been even better but for impairment charges of P1.96m against trade receivables. These impairment charges reflect a conservative and prudent management view and collection efforts will continue vigorously in the second half of the year. The asset management division continues to be the main contributor to Group profitability and cash flow and half yearly results are above budget. Results include performance fees of P2.18m earned via redemptions from the Imara Africa Opportunities Fund and from the operations of the South African asset management business, where investment performance hurdle rates were exceeded for the first time. A significant benchmark was achieved during October 2013 when funds under management exceeded USD600m for the first time in the Group’s history. The stockbroking division delivered better than expected results with profit after tax almost 45% above budget. This was due to a stellar performance by Imara Edwards Securities in Zimbabwe who capitalized on abnormally high pre and post-election stockbroking activity, mainly by foreign investors, and by the turnaround performance at Imara Capital Securities in Botswana. The Botswana company has been loss making in the past two financial years but has had a strong return to profitability in the first half year with results 185% above budget. The corporate finance division is profitable for the six month period with results having been distorted by the inclusion of the P6.16m NBS cost award. Budgets for the 2014 financial year did not include any income from the NBS arbitration and as a result the division is above budget for the year to date, despite a disappointing performance by the corporate finance business in Zimbabwe. Importantly from a tax perspective, the NBS cost award has been offset against previously assessed tax losses thereby reducing the overall group tax charge for the half year and accentuating the impact of award on a post-tax basis. The joint venture initiative with Mondise Capital in South Africa, although loss making for the six month period, is gathering traction and the empowerment credentials which this venture now has, is enabling greater market penetration with some interesting mandates in the pipeline. The trust and administration business in Mauritius is marginally behind budget on a year to date basis but this is in the main, attributable to the seasonal nature of administrative work which is charged on a time and rate basis, rather than a decline in the number of clients. As highlighted above, a direct comparison of results for the 2012 and 2013 reporting periods is to some extent misleading due to the consolidation effect of Imara Beresford International Limited, which became a subsidiary company on 1 November 2012. For the 2012 reporting period, this entity was treated as an associate company. The Group balance sheet remains solid with shareholder’s equity at P135.77m and total assets P322.71m. There have been no major changes to the core composition of the Group balance sheet aside from the quantum of trade receivables and payables which are directly affected by broking activity at the South Africa stockbroker Imara SP Reid. The Group has no borrowings and stronger cash flows have bolstered offshore cash holdings. On 1 September 2013, the Group acquired a further 5% of the equity of Botswana stockbroker, Imara Capital Securities. This equity tranche was acquired from a consortium of staff employees. Implementation of the Enterprise Wide Risk Management System is continuing in accordance with the project plan, with the aim of having this complete by the end of the current financial year. Risk reporting continues to improve and is more robust and detailed. The establishment of a separate Risk Sub-Committee at board level has been deferred for the time being and audit and risk matters will continue to be dealt with by a combined Audit and Risk Committee. The establishment of a compliance function at Group level is progressing well. The initial focus of the department has been updating compliance and procedural manuals and with this exercise now substantially complete, the departmental focus will change in early 2014 to regulatory compliance. The Group re-organisation is progressing slowly with tax and company de-registration processes at varying stages of completion. These processes are painstakingly slow because of the interaction with regulatory authorities but the Group remains optimistic that finality can be achieved before the end of the current financial year. OUTLOOK The growth of the annuity income businesses in the Group is encouraging from the perspective of sustainability of earnings. Post the half year reporting date, there have been further inflows to the Imara Funds and this augers well for the second half performance. These businesses are however heavily dependent on markets remaining robust and any correction will impact full year results. Imara Capital Zimbabwe, which is a key component of the overall Group, is directly affected but the political environment in Zimbabwe. Post the Zimbabwe elections there is a more pragmatic approach to economic issues but the macro-economic improvements remain fragile and the strong first half performance in Zimbabwe may be difficult to sustain. As at the reporting date, the asset management business is eligible for certain performance fees based on current unit values. Shareholders are reminded however that performance fees only accrue on the final day of the financial year when unit values are finally determined, and for this reason no accrual has been made in the financial statements for performance fees. Your Board is encouraged by the first half performance of the Group and management remains committed to ensuring a greater degree of sustainability in the earnings performance of the Group DIVIDEND DECLARATION No interim dividend has been declared. For and on behalf of the Board of Directors SM Ndoro MJS Tunmer Chairman Chief Executive Officer Company Offices: Unit 6, Second Floor, Morojwa Mews Plot 74769, Western Commercial Road, New CBD, Gaborone Telephone 318 8710 Fax 319 1767 Company Secretaries: UPT Secretarial Services (Pty) Limited Time Square, Plot 134, Independence Avenue PO Box 46699, Village, Gaborone Telephone 390 6855 Fax 390 6860 Transfer Secretaries: Corpserve Botswana Second Floor, Unit 206, Plot 64516 Showgrounds Close, Fairgrounds Telephone 393 2244: email: 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. Adjustment to operating profit / (loss)