Wrap Text
Unaudited Interim Results for the Six Months Ended 30 September 2014
PRESCIENT LIMITED
Registration number: 1936/008278/06
JSE share code: PCT
ISIN: ZAE000163531
Unaudited Interim Results
for the Six Months Ended 30 September 2014
Highlights
- Local assets under management of R60.4 billion
(September 2013: R57.8 billion)
- Local third party assets under administration of R52.0 billion
(September 2013: R18.1 billion) and offshore assets under
administration of €812.5 million (September 2013: €279.4 million)
- Profit from continuing operations of R56.4 million
(September 2013: R54.9 million)
- Profit for the period ended 30 September 2014 of R56.4 million
(September 2013: R17.1 million)
- Headline earnings per share of 3.59 cents
(September 2013: 2.96 cents)
- Interim gross dividend of 2.75 cents per share
(September 2013: 2.5 cents per share)
Unaudited condensed consolidated statement of cash flows
Six months Six months
unaudited unaudited
30 Sep 2014 30 Sep 2013
R'000 R'000
Cash flows from operating activities
Profit for the period 56 416 17 118
Income tax expense 23 169 22 792
Non-cash movements and adjustments to profit before tax (4 622) 1 708
Changes in working capital 17 212 (24 528)
Dividends received 1 288 6
Dividends paid (42 460) (21 072)
Interest received 8 371 8 267
Interest paid (4 401) (3 002)
Tax paid (18 838) (22 416)
Cash flows from operating activities from discontinued operation – 32 424
Net cash inflow from operating activities 36 135 11 297
Cash outflow from investing activities (6 039) (10 335)
Cash flows from investing activities from discontinued operation – (1 422)
Cash (outflow)/inflow from financing activities (6 278) 5 350
Cash flows from financing activities from discontinued operation – (554)
Net increase in cash and cash equivalents 23 818 4 336
Effect of exchange rate fluctuations on cash held (63) 7 263
Net cash and cash equivalents at the beginning of the period 33 044 100 641
Net cash and cash equivalents at the end of the period 56 799 112 240
Comprising
Cash and cash equivalents 74 120 71 244
Bank overdraft (17 321) (5 389)
Cash and cash equivalents held for sale – 46 385
Net cash and cash equivalents at end of the period 56 799 112 240
Unaudited condensed consolidated statement of financial position
Unaudited Unaudited Audited
30 Sep 2014 30 Sep 2013 31 March 2014
R'000 R'000 R'000
Assets
Non-current assets 9 457 779 7 237 398 7 331 567
Property and equipment 26 724 7 534 11 210
Investment property 24 279 20 460 24 724
Goodwill and intangible assets 411 061 424 428 423 361
Deferred tax asset 7 589 5 145 4 841
Long-term loans and other receivables 30 586 72 138 70 288
Investment in equity-accounted investees 8 523 1 184 1 493
Financial assets at fair value through profit or loss 144 374 112 013 105 842
Linked investments backing policyholder funds 8 804 643 6 594 496 6 689 808
Current assets 637 915 740 344 527 764
Inventory 17 764 22 294 10 506
Trade and other receivables 189 142 126 375 171 692
Amounts owing by clients and clearing houses 354 213 414 753 287 082
Taxation receivable 2 676 4 719 3 398
Cash and cash equivalents 74 120 71 244 55 086
Assets held for sale – 100 959 –
Total assets 10 095 694 7 977 742 7 859 331
Equity
Stated capital 660 600 637 062 637 062
Reserves (2 266) 1 181 (841)
Retained income 111 593 87 434 96 367
Total equity attributable to owners of the Company 769 927 725 677 732 588
Non-controlling interests 4 019 10 788 8 461
Total equity 773 946 736 465 741 049
Liabilities
Non-current liabilities 8 857 635 6 709 194 6 732 401
Deferred tax liability 7 402 7 197 5 480
Policyholder investment contract liabilities 8 802 649 6 594 496 6 685 086
Loans payable 47 584 107 501 41 835
Current liabilities 464 113 532 083 385 881
Trade and other payables 83 770 78 235 57 594
Amounts owing to clients and clearing houses 352 219 412 087 286 654
Loans payable – – 12 865
Current tax payable 10 803 8 088 6 726
Bank overdraft 17 321 5 389 22 042
Liabilities held for sale – 28 284 –
Total liabilities 9 321 748 7 241 277 7 118 282
Total equity and liabilities 10 095 694 7 977 742 7 859 331
Unaudited condensed consolidated segment report
Financial Services Information Management Services Group
Six months Six months Six months Six months Six months Six months
unaudited unaudited unaudited unaudited unaudited unaudited
30 Sep 2014 30 Sep 2013 30 Sep 2014 30 Sep 2013 30 Sep 2014 30 Sep 2013
Conti- Discon- Conti- Discon- Conti- Discon- Conti- Discon- Conti- Discon- Conti- Discon-
nuing tinued nuing tinued nuing tinued nuing tinued nuing tinued nuing tinued
R'000 R'000 R'000 R'000 R'000 R'000
Segment
external
revenue 151 117 – 142 807 64 899 238 253 – 190 034 – 389 370 – 332 841 64 899
Segment
profit
before tax 55 841 – 58 934 (37 792) 23 744 – 18 768 – 79 585 – 77 702 (37 792)
Unaudited condensed consolidated statement of profit or loss and other comprehensive income
Six months Six months
unaudited unaudited
30 Sep 2014 % 30 Sep 2013
R'000 Change R'000
Continuing operations
Total income 389 370 17 332 841
Expenses (306 762) 21 (254 553)
Profit from operations 82 608 6 78 288
Other income 2 601 2 780
Share of loss of equity-accounted investees, (net of tax) (1 223) (364)
Finance costs (4 401) (3 002)
Profit before taxation 79 585 77 702
Income tax expense (23 169) (22 792)
Profit from continuing operations 56 416 3 54 910
Discontinued operation
Loss for the period from discontinued operation – (6 649)
Goodwill impairment on discontinued operation – (31 143)
Profit for the period 56 416 230 17 118
Other comprehensive income
Items that are or may be reclassified to profit or loss
Foreign currency translation differences – foreign operations (702) (172) 970
Other comprehensive income for the period, net of tax (702) 970
Total comprehensive income for the period 55 714 208 18 088
Profit attributable to:
Owners of the Company 56 708 280 14 911
Non-controlling interests (292) 2 207
Profit for the period 56 416 17 118
Total comprehensive income attributable to:
Owners of the Company 56 006 253 15 881
Non-controlling interests (292) 2 207
Total comprehensive income for the period 55 714 18 088
Basic earnings per share (cents)
Continuing operations 3.59 6 3.38
Discontinued operation – (2.42)
3.59 0.96
Diluted earnings per share (cents)
Continuing operations 3.59 3.38
Discontinued operation – (2.42)
3.59 0.96
Notes to the statement of comprehensive income
Headline earnings per share (cents)
Continuing operations 3.59 6 3.38
Discontinued operation – (0.42)
3.59 2.96
Diluted headline earnings per share (cents)
Continuing operations 3.59 3.38
Discontinued operation – (0.42)
3.59 2.96
Dividend per share (cents)
Interim 2.75 2.50
Earnings per share
Unaudited Unaudited
30 Sep 2014 30 Sep 2013
Actual number of shares in issue at the end of the period 1 645 915 093 1 598 022 450
Weighted average number of shares in issue at the end of the period 1 579 783 732 1 573 011 133
Treasury shares 26 710 245 25 011 317
Continuing operations R'000 R'000
Earnings attributable to shareholders 56 416 54 910
Non-controlling interests 292 (2 207)
Earnings attributable to ordinary shareholders 56 708 52 703
Headline earnings attributable to ordinary shareholders 56 708 52 703
Discontinued operation
Earnings attributable to shareholders – (37 792)
Non-controlling interests – –
Earnings attributable to ordinary shareholders from discontinued operation – (37 792)
Headline earnings attributable to ordinary shareholders from discontinued operation – (6 649)
Unaudited condensed consolidated statement of changes in equity
Share-based Non-
Stated Translation Treasury payment Retained controlling Total
R'000 capital reserve shares reserve income Total interests equity
Balance at 1 April 2013 637 062 12 396 (12 116) – 93 595 730 937 9 781 740 718
Total comprehensive
income for the period
Profit for the period – – – – 14 911 14 911 2 207 17 118
Total other
comprehensive income – 970 – – – 970 – 970
Total comprehensive
income for the period – 970 – – 14 911 15 881 2 207 18 088
Transactions with
owners recognised
directly in equity
Contributions by and
distributions to owners
of the Company
Treasury shares sold – – (69) – – (69) – (69)
Dividends declared
during the period – – – – (21 072) (21 072) (1 200) (22 272)
Total contributions by
and distributions to
owners of the Company – – (69) – (21 072) (21 141) (1 200) (22 341)
Total transactions with
owners of the Company – – (69) – (21 072) (21 141) (1 200) (22 341)
Balance at 30 September
2013 637 062 13 366 (12 185) – 87 434 725 677 10 788 736 465
Balance at 1 April 2014 637 062 11 013 (11 854) – 96 367 732 588 8 461 741 049
Total comprehensive
income for the period
Profit for the period – – – – 56 708 56 708 (292) 56 416
Total other
comprehensive income – (702) – – – (702) – (702)
Total comprehensive
income for the period – (702) – – 56 708 56 006 (292) 55 714
Transactions with
owners recognised
directly in equity
Contributions by and
distributions to owners
of the Company
Treasury shares sold – – (837) – – (837) – (837)
Dividends declared
during the period – – – – (41 482) (41 482) (978) (42 460)
Issue of ordinary shares 23 538 – – – – 23 538 – 23 538
Equity-settled share
based payments – – – 114 – 114 – 114
Total contributions by
and distributions to
owners of the Company 23 538 – (837) 114 (41 482) (18 667) (978) (19 645)
Changes in
ownership interests
in subsidiaries
Loss of control – – – – – – (3 172) (3 172)
Total changes in
ownership interests
in subsidiaries – – – – – – (3 172) (3 172)
Total transactions with
owners of the Company 23 538 – (837) 114 (41 482) (18 667) (4 150) (22 817)
Balance at 30 September
2014 660 600 10 311 (12 691) 114 111 593 769 927 4 019 773 946
Notes to the unaudited condensed
consolidated interim financial statements
Basis of preparation and accounting policies
Statement of compliance
The unaudited condensed consolidated interim financial
information has 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 unaudited
condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements. These unaudited 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
unaudited condensed consolidated interim financial statements
are presented in Rand, rounded to the nearest thousand. The
accounting policies applied in the presentation of the unaudited
condensed consolidated financial statements are in accordance
with International Financial Reporting Standards and are
consistent with those presented in the previous annual financial
statements.
These unaudited condensed consolidated interim financial
statements were prepared under the supervision of Michael
Buckham, CA (SA), and approved by the Board of Directors on
21 November 2014.
Share based payments
During the current period the Group established a Forfeitable
Share Plan (FSP). These payments are classified as equity-
settled share-based payment transactions in respect of services
received from employees.
The fair value of the services received is determined by
reference to the fair value of the forfeitable shares on the grant
date to the employee and the terms of the FSP. During the
current period 20 208 904 shares were awarded in terms of the
FSP. The shares are subject to a vesting period of 5 years and
the achievement of performance and employment conditions.
Judgements and estimates
Preparing the unaudited condensed consolidated interim financial
statements 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 these unaudited condensed consolidated
interim financial statements, 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 2014.
Related party transactions
The Group, in the ordinary course of business, entered into
various intercompany transactions with related parties.
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
Revenue for the period for continuing operations was R389.4
million (September 2013: R332.8 million) with profit before tax
of R79.6 million (September 2013: R77.7 million).
Headline earnings per share for continuing operations for the
period increased by 6% from 3.38 cents per share to 3.59 cents
per share. The weighted average number of shares in issue for
the six months ended 30 September 2014 was 1 579 783 732
(September 2013: 1 573 011 133).
Financial Services
The Financial Services segment has continued to diversify its
earnings base with a number of new initiatives coming to the
fore and with strong contributions coming through from certain
business units.
Revenue for the segment was R151.1 million for the period
(30 September 2013: R142.8 million) and profit before tax was
R55.8 million (30 September 2013: R58.9 million).
The core driver of earnings in the Financial Services segment
continues to be Prescient Investment Management ("PIM"). The
performance of all our mandates against benchmark has
improved considerably and this has started to reflect in the
growth in assets under management ("AUM"). In the most
recent months we have seen some strong retail flows into
our income funds and we will look to expand this to other
mandates as we continue to make inroads in the retail market
where we believe our range of products is suitable for the retail
investor. We have seen net flows into our retail funds of R1.3
billion in the last six months.
Other strong initiatives in PIM include the growth in the China
mandates. We were allocated an additional $100 million quota
from the Chinese authorities earlier this year and we are in the
process of filling that allocation. The equity market in China has
been on a recovery path and we expect good performance from
our China funds.
PIM had AUM of R60.4 billion at 30 September 2014 (September
2013: R57.8 billion).
Prescient Administration Services was renamed Prescient Fund
Services ("PFS") during the period and this more accurately
reflects the range of solutions offered by this company within the
Group. The core of the business remains third party investment
administration that couples accurate fund accounting services
with unitholder administration, supported by a range of other
services (hence the name change). We have launched a hedge
fund administration offering which has already signed up a
number of third party hedge fund managers as clients and we
expect this to complement many of the services we already
offer. We have also bedded down the RECM relationship with
the full administration coming across from 1 June 2014. This
implementation was an important milestone for the business
as we now have a comprehensive offering which includes
fund accounting, a front office service and a flexible reporting
solution that we are now able to offer asset managers. We will
continue to look for growth in this area.
Through the rollout of these additional services we have seen a
considerable growth in the external revenue generated by PFS
and this will continue to diversify our earnings.
PFS has also launched a division called Prescient Global
Execution Services which is a niche business offering efficient
dealing services to our third party clients. Trade cost analyses
have shown that trading efficiency is considerably improved
through this new offering and is a great enhancement for our
clients. We are also offering transition services through this new
venture.
Our Irish domiciled administration business, Stadia Fund
Management Services ("Stadia"), continues to mirror the
services we offer locally. We are seeing an increase in growth
of third party clients in offshore domiciles seeking efficient, well-
priced administration services. The increase in the regulatory
burden in the offshore market has created opportunities for our
Irish business and the hard work put into building the operations
is starting to deliver results. Stadia continued to contribute well
to Group profitability.
The administration businesses, overall, made a far greater
contribution to Group profitability in the most recent six-month
period. In the prior period we had high consulting costs with
the ongoing take on of some large business flows and system
implementation whilst we also did not yet have the full effect
of the revenue generated from those new clients. The current
period reflected a more stable cost base as well as enhanced
revenue for a greater portion of the period. We are mindful
of the foreign denominated costs going forward, especially
in the weak rand environment, but we do believe that our
staff complement is strong and we do not foresee too many
additional fixed costs being added.
Third party assets under administration ("AUA") was R52.0
billion at 30 September 2014 (September 2013: R18.1 billion)
whilst Stadia had third party assets under administration of
€812.5 million (September 2013: €279.4 million).
Prescient Life has had a strong focus on its seamless transition
product as well as platform services to third party clients. The
seamless transition product (that transitions members from
pre-retirement to post-retirement seamlessly) has been well
received with a large union fund and we are looking to take on
a number of clients into the new calendar year. This product
has been designed to be market leading for the implementation
of Retirement Reform by National Treasury and although this
reform has been delayed (following the recent announcement
by National Treasury) the clients we are engaging with
are committed to a process that embraces the key points
of this Reform and will be going ahead regardless of the
implementation date.
Prescient Life has also seen a significant growth in its
policyholder assets that is due to the growth in the third
party platform business. The Life company's policyholder
assets at 30 September 2014 were R8.8 billion (30 September
2013: R6.6 billion). The company is also well capitalised to
accommodate growth that is expected to come through in the
next financial period.
Prescient Securities faced a challenging period over the last
six months. Revenues were down on the previous period
resulting in a reduced contribution to Group profits. The division
continues to face pressures on margins as well as reduced
volumes, but a restructured environment is tasked with facing
these challenges. The company remains profitable and recently
performed extremely well in the Spire Awards which is the
benchmark awards for Agency brokers. The results of the
awards were as follows:
- #1 – Best Agency Broker House
- #1 – Best Agency Broker – Bonds
- #1 – Best Agency Broker – Listed Interest Rate Derivatives
- #2 – Best Agency Broker – Listed FX Derivatives
- #2 – Best Research Team – Quantitative Research
Prescient Wealth made strong progress in developing its
product offerings and established a strong administrative base
for the writing of new business. The revenue is starting to
come through and we are excited about the future of this new
diversified offering in the Prescient Group.
Information Management Services
Total revenue for the six months ended 30 September 2014
amounted to R238.3 million compared to R190.0 million for the
corresponding period ending 30 September 2013. Profit before
tax amounted to R23.7 million (September 2013: R18.8 million).
The Information Management Services segment continues to
cement its position as data specialists and as the foremost
provider of professional services in this area. Increased focus
on our traditional services is continuing to result in recurring
contracts and stable revenue. Demand for these services
remains very high and all indications are that this trend will
continue for an extended period of time.
Dividend
An interim gross dividend of 2.75 cents per share, in respect
of the six months ended 30 September 2014, was declared on
27 November 2014.
Biannually, 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 1 648 615 093 shares in issue at the dividend
declaration date, of which 26 710 245 are held as treasury
shares. The total dividend amount payable is R45.3 million
(30 September 2013: R40.0 million).
This is a dividend as defined in the Income Tax Act, 1962, and is
payable from income reserves. Dividends are 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
2.3375 cents per share, while it is 2.75 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 Listings Requirements of the JSE
Limited, the following dates are applicable:
Last day to trade cum dividend Friday, 16 January 2015
Shares trade ex dividend Monday, 19 January 2015
Record date Friday, 23 January 2015
Payment date Monday, 26 January 2015
Share certificates may not be dematerialised or rematerialised
between Monday, 19 January 2015 and Friday, 23 January
2015, both dates inclusive.
Prospects
Financial Services
The Financial Services segment continues to focus on
service excellence to clients across all business units. Our
entrepreneurial culture and innovative teams will seek
opportunities in areas that we believe will deliver the best
possible solutions for those clients.
In Prescient Investment Management, the strengthening of
the China offering across an additional mandate is a growth
area and we are also looking for opportunities in alternative
investments. We are in the process of finalising our Clean
Energy and Infrastructure Fund that is an investment asset
that fits extremely well into our investment philosophy and
will complement many of our fixed income and real return
mandates. We have also launched a Market Neutral Hedge
Fund which provides our clients with a vehicle to take advantage
of pricing arbitrage opportunities in the local equity market. The
Prescient Africa Equity Fund represents untapped potential and
we strongly believe in the African continent as a massive growth
area into the future.
Prescient Fund Services continues to evolve its offering and
we believe we have the most comprehensive service to the
market. Our core is the investment administration offering but
with peripheral services such as hedge fund administration,
global dealing services and private equity administration our
client universe has grown substantially. We expect strong
growth from Prescient Fund Services, locally and globally, in
the year to come.
Prescient Life Limited is also on the cusp of strong growth. We
have seen significant interest in our seamless transition offering
but we are also looking to grow the platform services which we
have already seen generating strong interest in the last few
months.
Prescient Securities' service offering remains very competitive
and highly regarded by our clients and efficient trade execution,
premium research and high levels of service will remain the key
factors that continue to generate profitability.
Prescient Wealth is well staffed, has established a strong
administrative base and is well positioned for significant
revenue growth.
Information Management Services
Traditional services continue to form the basis of stable
revenue and earnings and this focus will continue into the
future, however, new services, as an extension of our current
successful service offering, have been launched with satisfying
results, paving the way for additional revenue streams over the
next two years.
Changes to the Board of Directors
During the period under review the following changes were
made to the Board of Directors: Monty Kaplan retired from
the Board, effective from 15 August 2014. The Directors and
Management thank Monty for the valuable contribution made
to the Company. Zane Meyer was appointed as the lead
independent non-executive director. Zane has been on the
Board since 10 July 2012 and is the Chairman of the Audit
Committee.
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: AM Louw (Chairman), H Steyn (CEO), M Buckham (Financial Director), Z Meyer (Lead Independent Non-executive),
H Sonn (Independent Non-executive), K Moloko (Independent Non-executive), R van Rooyen (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
Website: www.prescient.co.za
Date: 27/11/2014 08:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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