Interim Results
January 29 2001 - 4:45AM
UK Regulatory
RNS Number:9659X
Genbel South Africa Ld
29 January 2001
GENBEL SOUTH AFRICA LIMITED (Incorporated in the Republic of South Africa)
(Registration number 1949/032379/06)
INTERIM RESULTS TO 31 December 2000 Volatile markets
7% of assets offshore
Share buy-back continues
INTERIM REVIEW
Genbel's performance Genbel's net asset value declined by 3,2% to 2 126 cents
per share for the six months under review, while its benchmark, the FINDI,
achieved a positive return of 1,2%. The Genbel share price of 1 665 cents on
29 December 2000 reflected a 21,7% discount to net asset value.
INVESTMENT RETURNS TO DECEMBER 2000
1 year 3 year return per 5 year return per
return annum annum
% %
%
Genbel South Africa 1,6
(net asset value) (19,5) 10,8
Genbel South Africa
(share price incl. (29,4) (3,3) 11,7
dividends)
JSE Financial & Industrial
Index (5,6) 4,5 5,1
(incl. dividends)
Genbel's net asset value reached the highest value for the period of 2 400
cents a share on 4 September 2000 and a lowest value of 1 948 cents on 30
November 2000. The wide fluctuation in prices was caused mainly by investments
in the TMT and retail sectors. These proved to be extremely volatile during
the period, because of the correction in the NASDAQ and certain VAT and
Customs disputes that plagued the retail sector.
The Genbel share price fluctuated between a high of 2045 cents a share and a
low of 1 500 cents per share.
The composition of Genbel's portfolio differs considerably from that of the
FINDI, Genbel's benchmark. Genbel's investments are typically concentrated in
shares of companies with entrepreneurial cultures, which are believed to have
the potential to achieve above-average growth over the long term. Portfolios
with this type of investment profile can be expected to outperform the FINDI
in a rising market, as Genbel did up to August 1998, and underperform the
index in weak or declining markets, as Genbel has done since then. The board
has reviewed Genbel's mandate, as it does on a regular basis, and has decided
that it should be retained in order to achieve the above long-term growth
objective.
Genbel's portfolio At 31 December 2000 Genbel's assets consisted of a
portfolio of South African and international shares with a market value of
R856 million. The portfolio has not been assembled as an "index-tracking"
portfolio, but rather with the objective of yielding long-term returns in
excess of those achieved by investing in the FINDI. New purchases are biased
towards financial and industrial companies with significant growth potential.
Genbel has utilised R89 million in its share buy-back programme and invested
R59 million in offshore investments since the year-end. The share buy-backs
and investment were principally funded from a reduction of Genbel's holding in
Dimension Data and Comparex and from the proceeds of Sanlam's offer to
minority shareholders of Gensec. With these transactions Genbel reduced its
TMT exposure to 27% (38,5% at 30 June 2000) and increased its exposure to the
financial and retail sectors to 34,3% (32,7%) and 18,1% (15,8%) respectively.
No net debt was used during the period as management felt that market
conditions were still too uncertain. At 31 December Genbel had R31 million in
cash, which will be utilised for investments and the share buy-back programme.
OFFSHOREINVESTMENTSTRATEGY
During the period Genbel received approval from the South African Reserve Bank
to invest up to 15% of its assets offshore. As a local fund manager Gensec
believes that it is appropriate to appoint international professionals to
manage offshore investments and has decided that the most effective solution
for Genbel would be to appoint a multi-manager to manage Genbel's offshore
assets. Gensec Asset Management is the designated multi-manager and the first
investment, equivalent to R59 million and approximately 7% of the trust's
assets as at 31December, has been made in a global equity fund, the Gensec
Global Enhanced Equity Fund. The fund, which measures itself against the
Morgan Stanley World Index, employs some of the top international fund
managers including Merrill Lynch Investment Managers and Alliance Capital to
manage the underlying portfolios. The fund has consistently outperformed its
benchmark since inception and achieved a return of 30% per annum for the last
three years in rand terms. Genbel does not pay any initial fees and the
management fee is 0,85% per annum, out of which the underlying investment
managers are paid. Believing that it is important to diversify the portfolio
geographically and so reduce investment risk to the domestic market, Genbel
will continue to increase its exposure to offshore investments until the
approved level of 15% of the fund's assets has been reached.
SHARE BUY-BACKS The current authority granted in October 2000 has now nearly
been exhausted as 9% (4293500 shares) has been repurchased since then. As the
directors wish to continue the programme a shareholders' meeting will be
convened on 15 February 2001 to consider, inter alia, the increase of the
current authority to 20% (9697325 shares) of the number of issued shares in
October 2000. This would allow for the further repurchase of approximately 11%
(5403825 shares) of that number of shares. A circular and notice of general
meeting was posted to shareholders on 23 January 2001. DIVIDEND The company
has a policy of declaring dividends on an annual basis after the June
year-end.
OUTLOOK After the recent interest rate cut in the US by the Federal Reserve
Board and the possibility of further rate cuts during 2001 we are cautiously
optimistic about the prospects of further interest rate cuts in South Africa.
This, combined with higher GDP growth, is expected to provide a more positive
investment environment for the rest of the financial year. We expect
volatility to continue as international markets digest some negative earnings
surprises and sentiment improves as the effect of interest rate cuts starts to
flow through. We believe the financial and retail sectors are well positioned
to take advantage of this better investment environment and the valuation risk
is also much smaller in the TMT sectors of the South African market. The
valuations of the mid cap shares are also the lowest in the past five years
and the outlook for this sector has improved. Genbel's exposure to the quality
companies in these sectors makes us feel confident that Genbel will be able to
show attractive returns over the next reporting period.
TL de Beer Chairman
AD Botha Director
Johannesburg 29 January 2001
The interim report will be posted to shareholders shortly and the full text of
the interim report can be viewed at www.genbel.com. Directors: TL de Beer
(Chairman), AD Botha, JH Fouche, Dr D Konar, R Masson, RW May, Dr KDK Mokhele,
DK Smith. Company secretary: EH Verbeek.
BALANCE SHEETS
31 December 31 December 30 June
R million 2000 1999 2000
Unaudited Unaudited Audited
CAPITAL EMPLOYED
Ordinary share capital and premium 147 246 218
Non-distributable reserve - 22 22
Retained earnings 375 367 356
Ordinary shareholders' interest 522 635 596
Money market liabilities 1 74 37
Accounts payable 13 7 30
536 716 663
EMPLOYMENT OF CAPITAL
Cash and short term funds 31 2 10
Investments
Book value 491 708 614
Valuation 856 1 357 1 029
Accounts receivable 14 6 39
536 716 663
Net asset value 887 1 284 1 011
Net asset value per share (cents) 2 126 2 649 2 197
Number of shares (000) 41 718 48 487 46 024
Opening balance (000) 48 487 48 487 48 487
Capitalisation award (000) 1 098 - -
Treasury shares (000) (4 537) - (2 463)
Shares cancelled (000) (3 330) - -
JSE share price (cents per share) 1 665 2 450 1 850
Discount to net asset value (%) 21,7 7,5 16,0
JSE Financial and Industrial Index 10 999 11 883 10 878
CASH FLOW STATEMENTS
R million Six months to Six months to Year to
31 December 31 December 30 June
2000 1999 2000
Unaudited Unaudited Audited
Cash flow from operating activities 146 11 106
Cash flow from financing activities (125) (59) (146)
Net increase in cash and short-term 21 (48) (40)
funds
Cash and short-term funds at beginning 10 50 50
of period
Cash and short-term funds at end of 31 2 10
period
INCOME STATEMENTS
Six months to Six months to Year to
31 December 31 December 30 June
2000 1999 2000
Unaudited Unaudited Audited
R million
INCOME
Dividend income 6 10 18
Net investment gains 17 16 38
23 26 56
EXPENSES
Net financing costs - 4 8
Administration fee 1 2 3
Other expenses 3 2 6
4 8 17
NET INCOME BEFORE TAXATION 19 18 39
Taxation - 1 1
ATTRIBUTABLE INCOME 19 17 38
Weighted average number of shares in 44 892 48 487 47 557
issue (000)
Basic and diluted earnings per share 42 35 80
(cents)
Dividends per share (cents) - - 70
STATEMENTS OF CHANGES IN EQUITY
Net Share Retained Total
share election earnings
capital reserve
R million
Unaudited six months ended 31 December
2000
Balance at 30 June 2000 218 22 356 596
Shares cancelled (55) (55)
Capitalisation award 18 18
Purchase of treasury shares (34) (34)
Reversal of share election reserve (22) (22)
Attributable income 19 19
Balance at 31 December 2000 147 - 375 522
Unaudited six months ended 31 December
1999
Balance at 30 June 1999 246 30 350 626
Net movement in share election reserve (8) (8)
Attributable income 17 17
Balance at 31 December 1999 246 22 367 635
Audited year ended 30 June 2000
Balance at 30 June 1999 246 30 350 626
Capitalisation award 22 22
Purchase of treasury shares (50) (50)
Net movement in share election reserve (8) (8)
Attributable income 38 38
Net dividends (32) (32)
Balance at 30 June 2000 218 22 356 596
For information about Genbel South Africa or the SharePlan please contact:
Genbel SharePlan Helpdesk at 0800 00 49 35 Genbel South Africa Limited
3A Summit Road, Dunkeld West, Sandton 2196 PO Box 411420, Craighall 2024
Telephone: +27 (11) 778 6000 Facsimile: +27 (11) 778 6990
Toll-free numbers available within South Africa
Telephone: 0800 00 49 35 Facsimile: 0800 00 49 36 Internet address:
www.genbel.com E-mail address: moreinfo@genbel.com Toll-free line for daily
NAV estimates call 0800 11 56 50
London office:
Project Consultants Limited
Walnut House, Walnut Gardens, Claydon
Banbury, Oxon OX17 1NA, United Kingdom
Telephone: 01295 690180/1
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