Lyons earnings slip as group shuts down structured finance division

Posted On Wednesday, 26 February 2003 10:01 Published by
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PROPERTY asset management group Lyons Financial Solutions has redefined its strategic objectives, and in the process has seen its earnings take a knock.

PROPERTY asset management group Lyons Financial Solutions has redefined its strategic objectives, and in the process has seen its earnings take a knock.

Lyons interim results for the six months ended November show headline earnings a share down to 1,5c from 1,7c for the previous comparable period. This was mainly a result of the closing down of the group's structured finance division following the departure of former CEO Garry Fromentin.

Fromentin is said to have been forced to quit as a result of an internal dispute about strategic direction. He was replaced by cofounder Ian Hewett in a move that saw the company change its strategic direction.

Hewett said the group decided to close down the structured finance division because market conditions in that business had turned against the group.

'We are now a focused corporate property services group,' he said yesterday. This focus entailed property asset management activities, property management and property development management for corporate clients.

The interim period produced a total fee income of R17m, up from R14,5m, and profit from operations came to R3,6m from R5,7m.

The group owns 45% of the R450m unlisted property fund Lyons Corporate Lease Fund. The group's interest in the property fund has drawn further controversy.

Some minority shareholders are concerned about what the group plans to do with its holding in the property fund which represents an equity investment of about R31m.

The concern has been that Lyon's interest in the unlisted property fund is not reflected in the group's trading price.

Lyons share price registered a gain of 2c to close at 8c on the JSE Securities Exchange SA yesterday.

Some minority shareholders believe that with a share price at the single digit level a minority buyout was inevitable and minorities would lose out on the locked-in value of the property fund. However, the buyer of Lyons would make significant gains on the discount reflected between the group's trading price and net asset value, estimated at about 15c a share.

Hewett said the property fund formed an integral part of Lyons, and he did not know of any minority buyout plans.

He said results of the six month under review came in below expectations, but looking ahead the business had never been in a stronger position than now.

He said the group had made a full provision for the costs of discontinuing the structured finance division and the second six months should produce a better performance. 'The positive effects of our decision are now being felt and will filter through to the bottom line immediately.'

He said the company's corporate clients continue to grow and the prospects for this year were encouraging. Fromentin has been bought out of the company.

Publisher: Business Day
Source: Business Day

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