Wrap Text
Reviewed interim results for the 6 months ended 30 September 2012
PRESCIENT LIMITED
(Previously PBT Group Ltd)
Registration number: 1936/008278/06
JSE share code: PCT
ISIN: ZAE000163531
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012
Highlights
- Listing of Prescient on the JSE in August 2012
- Local assets under management and
administration of R87.1 billion, and EUR5.47 billion
internationally
- Earnings per share of 4.24c per share
- Interim dividend of 3.30c per share
Condensed consolidated statement of financial position
Reviewed Reviewed Audited
30 Sep 30 Sep 31 March
2012 2011 2012
R'000 R'000 R'000
Assets
Non-current assets 6 521 309 4 867 510 4 941 986
Equipment 11 904 8 640 7 569
Investment property 18 162
Goodwill and intangible assets 463 984 67 348 69 348
Deferred tax asset 1 166 972 1 379
Long-term loans receivable 35 515 39 474 31 332
Investment in associate 4 288 2 225
Financial assets at fair value through profit or
loss 113 048 53 683 46 702
Linked investments backing policyholder
funds 5 873 242 4 697 393 4 783 431
Current assets 1 300 284 279 987 672 804
Inventories 19 795
Trade and other receivables 153 885 29 430 17 855
Amounts owing by clearing houses 418 099 212 405 298 882
Amounts owing from clients 487 329 300 996
Taxation receivable 3 651 3 392 2 240
Cash and cash equivalents 217 525 34 760 52 831
Total assets 7 821 593 5 147 497 5 614 790
Equity
Share capital 1 1 1
Share premium 601 656 53 308 53 308
Treasury shares (10 435) (17 849) (13 038)
Equity reserve 35 405
Translation reserve (435)
Retained income 93 105 105 706 63 963
Total equity attributable to owners of the
Company 719 297 141 166 104 234
Non-controlling interests 3 923
Total equity 723 220 141 166 104 234
Non-current liabilities 6 074 232 4 758 760 4 837 867
Deferred tax liability 5 208 587 4 130
Policyholder investment contract liabilities 5 873 242 4 697 393 4 782 822
Long-term loans payable 195 782 60 780 50 915
Current liabilities 1 024 141 247 571 672 689
Trade, other payables and provisions 95 638 39 139 38 951
Amounts owing to clearing houses 31 326 47 454
Amounts owing to clients 873 791 208 432 545 541
Current tax payable 9 844 3 824
Shareholders for dividend 36 919
Bank overdraft 13 542
Total liabilities 7 098 373 5 006 331 5 510 556
Total equity and liabilities 7 821 593 5 147 497 5 614 790
Condensed consolidated statement of comprehensive income
Six months Six months
reviewed reviewed
30 Sep 30 Sep
2012 % 2011
R'000 change R'000
Revenue 223 845 59% 140 736
Expenses 146 877 100% 73 359
Profit from operations 76 968 14% 67 377
Share of loss of equity-accounted investees
(net of tax) 309
Finance costs 5 471 2 445
Profit before taxation 71 188 64 932
Income tax expense 20 435 21 820
Profit for the period 50 753 18% 43 112
Other comprehensive income
Exchange losses on translating foreign
operations 435
Other comprehensive income for the period,
net of tax 435
Total comprehensive income for the period 50 318 43 112
Profit attributable to:
Owners of the Company 50 811 18% 43 112
Non-controlling interests (58)
Profit for the period 50 753 43 112
Total comprehensive income attributable to:
Owners of the Company 50 376 17% 43 112
Non-controlling interests (58)
Total comprehensive income for the period 50 318 43 112
Earnings per share (cents)
Basic 4.24 7% 3.96
Diluted 4.24 7% 3.96
Notes to the statement of comprehensive
income
Headline earnings per share (cents)
Basic 4.24 7% 3.96
Diluted 4.24 7% 3.96
Dividend per share (cents)
Interim 3.30 4% 3.18
Earnings per share
Reviewed Reviewed
30 Sep 30 Sep
2012 2011
Weighted average number of shares in issue during
the period 1 196 554 992 1 088 791 091
Weighted average number of shares potentially in issue 1 196 554 992 1 088 791 091
R'000 R'000
Earnings attributable to shareholders 50 811 43 112
Non-controlling interest (58)
Earnings attributable to ordinary shareholders 50 753 43 112
Headline earnings attributable to ordinary shareholders 50 753 43 112
Actual number of shares in issue at the end of the period 1 555 531 687 1 120 596 744
Condensed consolidated statement of changes in equity
Attributable to owners of the Company
Non-
Share Share Translation Treasury Equity Retained controlling Total
capital premium reserve shares reserve income Total interest equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 April 2011 1 53 308 (19 246) 100 394 134 457 (49) 134 408
Total comprehensive income for the period
Profit for the period 43 112 43 112 43 112
Total comprehensive income for the period 43 112 43 112 43 112
Transactions with owners recognised directly in equity
Contributions by and distributions to owners of the
Company
Treasury shares sold 1 397 1 397 1 397
Dividends declared during the period (36 170) (36 170) (36 170)
Total contributions by and distributions to owners
of the Company 1 397 (36 170) (34 773) (34 773)
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests (1 630) (1 630) 49 (1 581)
Total changes in ownership interests in subsidiaries (1 630) (1 630) 49 (1 581)
Total transactions with owners of the Company 1 397 (37 800) (36 403) 49 (36 354)
Balance at 30 September 2011 1 53 308 (17 849) 105 706 141 166 141 166
Balance at 1 April 2012 1 53 308 (13 038) 63 963 104 234 104 234
Total comprehensive income for the period
Profit for the period 50 811 50 811 (58) 50 753
Total other comprehensive income (435) (435) (435)
Total comprehensive income for the period (435) 114 774 154 610 (58) 154 552
Transactions with owners recognised directly in equity
Contributions by and distributions to owners of the
Company
Treasury shares sold 2 603 2 603 2 603
Issue of ordinary shares related to business combinations 548 348 35 405 583 753 583 753
Total contributions by and distributions to owners
of the Company 548 348 2 603 35 405 586 356 586 356
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests (21 669) (21 669) 3 981 (17 688)
Total changes in ownership interests in subsidiaries (21 669) (21 669) 3 981 (17 688)
Total transactions with owners of the Company 548 348 2 603 35 405 (21 669) 564 687 3 981 568 668
Balance at 30 September 2012 1 601 656 (435) (10 435) 35 405 93 105 719 297 3 923 723 220
Condensed consolidated statement of cash flows
Six months Six months
reviewed reviewed
30 Sep 30 Sep
2012 2011
R'000 R'000
Cash flows from operating activities
Profit before taxation 71 188 64 932
Non-cash movements and adjustments to profit before tax (9 687) (2 478)
Changes in working capital (24 990) (24 149)
Dividends received 721 1 333
Dividends paid (36 919) (36 170)
Interest received 6 315 4 076
Interest paid (5 471) (2 445)
Tax paid (27 137) (20 000)
Net cash outflow from operating activities (25 980) (14 901)
Cash inflow from investing activities 85 438 2 710
Cash inflow from financing activities 90 040 5 229
Net increase/(decrease) in cash and cash equivalents 149 498 (6 962)
Effect of exchange rate fluctuations on cash held 1 654 329
Cash and cash equivalents at 31 March 52 831 41 393
Cash and cash equivalents at 30 September 203 983 34 760
Condensed consolidated segment report
Financial services IT services Group
Six Six Six Six Six Six
months months months months months months
reviewed reviewed reviewed reviewed reviewed reviewed
30 Sep 30 Sep 30 Sep 30 Sep 30 Sep 30 Sep
2012 2011 2012 2011 2012 2011
R'000 R'000 R'000 R'000 R'000 R'000
Segment external
revenue 195 663 140 736 27 873 223 536 140 736
Segment profit
before tax 65 272 64 932 5 916 71 188 64 932
Notes to the condensed consolidated interim financial statements
During the period under review there were two significant transactions that have had a material
impact on the financial position and performance of Prescient Limited and its subsidiaries
("Prescient" or "Group"). On 31 May 2012 Prescient Holdings (Proprietary) Limited ("Prescient Holdings")
purchased the entire issued capital of AIB Asset Management Holdings (renamed Prescient Investment
Management (Ireland) ("Prescient Ireland")). The details of the acquisition are included in the note
on acquisitions.
In addition, Prescient Holdings listed on the JSE through a reverse acquisition of PBT Group
Limited ("PBT"). This transaction is defined as a reverse acquisition in terms of IFRS 3 Business
Combinations. This results in the legal acquiree (Prescient Holdings) becoming the accounting
acquirer whilst the legal acquirer (PBT) becomes the accounting acquiree. The transaction was
concluded on the listing date, 20 August 2012. The listed entity was renamed Prescient Limited and
the share code was changed from PBT to PCT. In addition, the Group acquired Prescient Capital
(Proprietary) Limited ("Prescient Capital") on the listing date.
Basis of preparation and accounting policies
Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with
IAS 34 Interim Financial Reporting, as well as the AC 500 Standards as issued by the Accounting
Practices Board or its successor, the requirements of the South African Companies Act, Act 71
of 2008 and the Listings Requirements of the JSE. The condensed consolidated interim financial
statements do not include all of the information required for full annual financial statements.
These condensed consolidated interim financial statements have been prepared in accordance
with the historical cost basis except for certain financial instruments and investment property
which are stated at fair value. The condensed consolidated interim financial statements are
presented in South African Rand, which is the functional currency of the Company and has been
rounded to the nearest thousand. No new standards, interpretations or amendments, which are
relevant to the Group's operations, became effective during the period.
The accounting policies applied in the presentation of the condensed consolidated interim
financial statements are in accordance with International Financial Reporting Standards and are
consistent with those presented in the previous annual financial statements.
These reviewed condensed consolidated interim results were prepared under the supervision of
Michael Buckham, CA (SA) CFA (Financial Director) and approved by the Board of Directors on
29 November 2012.
Judgements and estimates
Preparing the interim financial report requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this condensed consolidated interim financial report significant judgements made
by management in applying the Group's accounting policies and key sources of estimation
uncertainty were the same as those that applied to the consolidated financial statements as at
and for the year ended 31 March 2012.
Related party transactions
The Group entered into various intercompany transactions with related parties in the ordinary
course of business.
Subsequent events
With the exception of the items disclosed in this report there were no material events subsequent to
the reporting date.
Review of operations
Prescient Holdings listed on the JSE, in the Financial Services
sector, through a reverse acquisition into PBT Group Limited on
20 August 2012.
In addition, the six months to 30 September 2012 were highlighted
by numerous expansion initiatives resulting in structural changes
to the Group. The most significant of these initiatives was the
purchase of the Dublin-based investment management business,
AIB Asset Management Holdings (renamed Prescient Ireland) by
Prescient Holdings on 31 May 2012.
This set of condensed consolidated interim results includes
six months of operations for Prescient Holdings, four months of
operations for Prescient Ireland and one month of operations
for PBT.
Financial services
The investment management, administration and stock broking
businesses remain stable and the core part of operations. For
four of the six months under review, the equity market remained
relatively flat delivering a return of less than 4%. Lower equity
returns have been a feature since the start of 2011 with the equity
market delivering similar returns to cash from January 2011 to
July 2012. This resulted in lower performance from the Prescient
Positive Return strategy as there were no opportunities to lock in
equity gains while the fund continued to pay for capital protection.
This led to outflows from certain institutional clients. The strategy
focusses on delivering capital preservation for clients and has
done so consistently over time, while also delivering inflation-
beating results. The improvement in equity market returns from
August 2012 reflected positively in fund performance. The
investment philosophy at Prescient Investment Management
(Proprietary) Limited ("PIM") focusses on risk management for
clients and hence Positive Return remains a core strategy. Pricing
conditions, particularly the cost of protection, have continued to
improve for this strategy since the start of the year. PIM had assets
under management ("AUM") of R75.2 billion at 30 September 2012
(September 2011: R86.3 billion).
Subsequent to the September 2012 interim period, PIM
announced that it had given notice on the four mandates
managed for Nedgroup Investments (Proprietary) Limited
("Nedgroup"). PIM had a retail distribution relationship with
Nedgroup where some of PIM's flagship retail products were
sold under the Nedgroup brand. PIM has come to a point in
its development and growth strategy where consolidating all
flagship funds under its own brand is key. This paves the way
for PIM to market and sell its flagship and other core products
directly to the retail market. With the proposed retirement
reform in South Africa, the Group believes the ownership of all
products and building a strong brand is essential.
During the period under review, PIM was the first African institution
to be awarded a Qualified Foreign Institutional Investor ("QFII")
licence which allows the Group to invest directly in mainland
Chinese "A" shares. The legal processes are expected to be
complete in early 2013 when PIM will open its Prescient China
Balanced Fund to the market.
Administration outsourcing has continued to grow strongly with
third party assets under administration totalling R11.9 billion as
at 30 September 2012 (September 2011: R6.0 billion). Growth
came from continued inflows from existing co-name partner
clients and an increase in the number of new outsourced
relationships. The administration business continues to invest
in technology and has been able to deliver on all new reporting
requirements, including Regulation 28 of the South African
Pension Funds Act and Dividend Withholding Tax.
Prescient Securities (Proprietary) Limited ("Prescient Securities")
performed well in a very competitive market. The stock broking
industry continues to see downward pressure on brokerage
rates coupled with upward pressure on trading costs.
Prescient Securities' stature as a niche player in the South African
stock broking industry was once again affirmed with a strong
performance in the following 2012 industry surveys: Financial
Mail Rating of the Analysts (Equities and Derivatives) and the
Spire Awards (Fixed Income and Derivatives). Highlights from
these surveys include the following ratings:
- #2 Resources Small & Medium Market Cap Companies
- #2 Financial and Industrial Small & Medium Market Cap
Companies
- #3 Electronic and Electrical Equipment
- #3 Derivatives Research: (#1 unweighted)
- #3 Derivatives Trading
- #1 Best Agency Broker: IR Derivatives Volumetric
- #1 Best Agency Broker: FX Volumetric
- #3 Best Agency Broker: Cash Bonds
Overall results for Financial Services: Revenue increased by
39.0% to R195.7 million (September 2011: R140.7 million) with
the acquisition of Prescient Ireland contributing R49.9 million to
total revenue and R4 million to profit before tax. Profit before
tax for Financial Services increased by 0.5% to R65.3 million
(September 2011: R64.9 million). Included in the current period
is a significant non-recurring expense of R6.6 million relating to
a lease breakage cost for the operating premises of Prescient
Ireland.
IT Services
The reverse listing of Prescient Holdings resulted in PBT's
results being consolidated for one month only. These were
strong results and amounted to a profit contribution to the
Group of R5.9 million before taxation.
Acquisitions of subsidiaries and non-
controlling interests
On 31 May 2012 the Group obtained control of Prescient
Ireland by acquiring the entire issued share capital of the
company for an initial R72.2 million, with a further contingent
amount of R16.6 million. The Prescient Ireland acquisition
was financed by way of an external loan. The acquisition is
a continuation of the Group's expansion into the international
market and will diversify the Group's earnings and client
base. PIM's risk management and asset allocation skills fit
well in the Irish market, where retirement funds' assets are
still predominantly defined benefit and largely underfunded.
Prescient Ireland's AUM at 30 September 2012 was
EUR5.47 billion.
The total Prescient Ireland acquisition price was based on a
percentage of AUM. The initial payment constituted half of
the acquisition price and AUM was ring-fenced at the time.
The Group will pay a contingent consideration amount on
31 May 2013 and 30 November 2013 based on the value of
ring-fenced AUM at those dates. At the date of acquisition
management believed that the value of the contingent
consideration would be R16.6 million. The total acquisition
price, including the contingent consideration, is R88.8 million
On 20 August 2012 PBT acquired the entire issued share
capital of Prescient Holdings and was classified as a reverse
acquisition in terms of IFRS 3 Business Combinations and
therefore PBT is treated as the accounting acquiree. PBT was
acquired for a consideration of R470.5 million and the net assets
at acquisition are reflected in the table below. PBT offers IT
services to a diverse client base across South Africa, the rest of
Africa and Australia. These services primarily include healthcare
administration systems and consulting and implementation of
data and management information software.
On listing date there was also an acquisition of Prescient
Capital, an investment holding company with interests in
property-holding companies and a Dublin-based investment
administrator. Prescient Capital was acquired for a consideration
of R71.7 million.
Other acquisitions of subsidiaries include:
- A 75% investment in Greenfields Institute of Business
("GIB"), 50% of which was acquired through Prescient
Capital and a direct acquisition of 25% for a
consideration of R6.2 million. GIB provides marketing
research and consulting services to large corporates.
- 51% of Cyberpro Consulting ("Cyberpro") for a consideration
of R6.5 million. Cyberpro is a leading Microsoft Certified
software services company, and
- 100% of BI Blue Consulting ("BI Blue") for a consideration
of R8 million. BI Blue offers business intelligence services to
assist clients in harnessing data to improve decision-making.
If all acquisitions had taken place at the beginning of the period
under review, revenue of the Group would have increased by
R155.5 million and profit before tax would have increased by
R15.7 million.
The purchase price, in excess of the value of net identifiable
assets, has been provisionally determined as goodwill. The
allocation between intangible assets and goodwill will be
determined during the following financial period.
The following table summarises the recognised amounts of
assets and liabilities assumed at acquisition date:
Prescient Prescient
R'000 Ireland PBT Capital Other
Cash and cash
equivalents 79 522 83 983 4 366 5 344
Financial assets
at fair value
through profit or
loss 213 43 811 17 279 131
Investments in
associate 7 435
Equipment 2 280 2 136 136 319
Investment
property 17 967
Intangible assets 14 679 29 408 7 629
Deferred tax asset 197 93 44
Trade and other
receivables 55 775 57 871 1 267 5 778
Long-term loans
receivable 14 850 1 233 911
Inventories 20 516
Taxation
receivable 3 826 700
Current tax
payable (8 193) (5 565)
Trade, other payables
and provisions (86 811) (18 775) (575) (3 083)
Long-term loans
payable (14 037) (191) (487)
Deferred tax
liability (5 283)
Bank overdraft (13 233) (97)
Total net
identifiable assets 57 662 199 508 56 639 9 560
Provisional goodwill arising from the acquisitions has been
recognised as follows:
Prescient Prescient
R'000 Ireland PBT Capital Other
Total
consideration
transferred 72 224 470 466 71 732 25 911
Contingent
consideration
payable 16 578
Non-controlling
interests 9 605
Total net
identifiable assets (57 662) (199 508) (56 639) (9 560)
Goodwill 31 140 270 958 15 093 29 956
Dividend
An interim dividend of 3.3 cents per share, in respect of the
six months ended 30 September 2012, was declared on
29 November 2012. A portion of the gross dividend is being
paid out of pre-acquisition earnings in the context of the reverse
acquisition by Prescient Holdings.
Bianually, the directors will consider the payment of a dividend, taking
into account prevailing circumstances and future cash and capital
requirements of the Group in order to determine the appropriate
dividend in respect of a particular financial reporting period.
There are 1 576 346 232 shares in issue at the dividend
declaration date, of which 24 273 180 are held as treasury shares.
The total dividend amount payable is R52.0 million (Interim 2011:
Prescient Holdings paid a net dividend of R36.2 million).
This is a dividend as defined in the Income Tax Act, 1962, and
is payable from income reserves. Dividends declared after
31 March 2012, are no longer subject to the 10% Secondary
Tax on Companies (STC) regime, which levied the tax on the
declaring company, but are now subject to a 15% Dividends
Tax (DT) which is a withholding tax levied on non-exempt
shareholder recipients of the dividend. The net dividend
payable to shareholders who are subject to dividend tax is
2.805 cents per share, while it is 3.3 cents per share to those
shareholders who are exempt from dividend tax. Prescient's
income tax reference number is 9725/148/71/3.
In compliance with the listing requirements of the JSE Limited,
the following dates are applicable:
Last day to trade cum dividend Thursday, 13 December 2012
Shares trade ex dividend Friday, 14 December 2012
Record date Friday, 21 December 2012
Payment date Monday, 24 December 2012
Share certificates may not be dematerialised or rematerialised
between Friday, 14 December 2012 and Friday,
21 December 2012, both dates inclusive.
Prospects
Financial Services
The prospects for continued growth in existing products, the
international expansion of the Group, the QFII licence as well
as the expanded range of Prescient products in the retail
market has opened the doors for a number of exciting growth
opportunities into the future. The investment philosophy at PIM
will continue to be applied consistently across all mandates to
ensure that we deliver certainty and stability to clients. This
philosophy is being implemented at Prescient Ireland and we
believe that the methodology is well suited to the Irish pension
fund market.
Furthermore, the administration capability at Prescient will
allow for strong growth in third party administration. With our
systems and people, we believe we are well placed for growth
in a market that requires strong administration functionality
and the ability to deliver on growing reporting and regulatory
demands.
Prescient Securities continues to focus on monetising its
rated research and trade offering and to explore initiatives to
increase market share as a niche BEE stockbroker.
IT Services
The foundation for further growth has been cemented with the
implementation of the BI Blue and Cyberpro acquisitions. IT
Services comfortably exceeded its aim of deriving more than
50% of its income from international operations and this should
again be achieved for the next six months. Trading conditions
remain buoyant and the company is well positioned to benefit
from its leading position in data and information management
and healthcare software services.
Changes to the Board of Directors
During the period under review the following changes were
made to the board of directors: Heather Sonn, Keneilwe Moloko
and Zane Meyer were appointed as independent non-
executive directors and Pierre De Wet resigned as a director on
10 July 2012. Furthermore there was a change in responsibility
of directors with the appointment of Michael Buckham as
Financial Director and Murray Louw as Chief Executive.
External audit review
The external auditors, KPMG Inc., reviewed the condensed
consolidated statement of financial position of Prescient
Limited as at 30 September 2012 and the related condensed
consolidated statements of comprehensive income, changes
in equity and cash flows for the period then ended, and other
explanatory notes, from which this information has been
extracted. The review has been conducted in accordance with
the International Standard on Review Engagements 2410.
Copies of the unqualified report of KPMG Inc. are available for
inspection at the registered office of the Company.
Forward-looking statements
This announcement contains certain forward-looking
statements with respect to the financial condition and results
of the operations of Prescient Limited that, by their nature,
involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the
future. These may relate to future prospects, opportunities and
strategies. If one or more of these risks materialise, or should
underlying assumptions prove incorrect, actual results may
differ from those anticipated. By consequence, none of the
forward-looking statements have been reviewed or reported on
by the Group's auditors.
Company information
Directors: M Kaplan (Chairman Independent Non-executive), AM Louw (CEO), M Buckham
(Financial Director), H Sonn (Independent Non-executive), K Moloko (Independent Non-
executive), R van Rooyen (Non-executive), Z Meyer (Independent Non-executive)
Registered office: Prescient House, Westlake Business Park, Otto Close, Westlake, 7945,
South Africa
Postal address: PO Box 31142, Tokai, 7966
Registration number: 1936/008278/06
Sponsor: Bridge Capital Advisors (Proprietary) Limited
Transfer secretaries: Link Market Services
JSE share code: PCT
ISIN: ZAE000163531
www.prescient.co.za
Date: 29/11/2012 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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