Cytech and rand turn screws on Corpcapital.

Posted On Friday, 11 April 2003 02:00 Published by
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It has been a turbulent six months for Corpcapital.

It has been a turbulent six months for Corpcapital.

The investment banking group has endured a public boardroom spat and intense media attention following the resignation of Nic Frangos, one of its founders and non-executive directors. Allegations of governance abuses detailed by Frangos in his resignation letter led to the appointment of Nigel Payne, a forensic auditor, to look into the allegations.

In the past 18 months Corpcapital has also survived the small banking crisis and handed back its banking licence.

This latter event has left the balance sheet of Corpcapital for the six months to February looking remarkably different to that of the previous six months.

Foreign exchange losses and the impairment of its investment in online gambling company Cytech drove headline earnings down to R67.6 million from just under R100 million previously.

The company took a R29.2 million charge for currency losses and wrote down the investment in Cytech by R24.9 million.

Chief executive Jeff Liebesman said yesterday that Cytech's value impairment was largely a result of the rand's gains against the dollar, although it did also have a difficult trading period.

However, Liebesman pointed out that the change in the business mix made it difficult to compare the last six months with those of 2001.

He said attention should instead focus on the improvement from the six months to August.

"Overall it's a good performance," he said.

With the exclusion of the currency movements, Corpcapital was able to post a 127 percent improvement in headline earnings a share over the six months to August. The company produced headline earnings a share of 19.8c for the six months to February.

Looking forward, Liebesman said the company would shrink overheads and costs. As part of its strategy to unlock value, it would curtail new investments besides those in the property arena.

But he expected the year ahead to remain difficult.

No dividend was declared.

Corpcapital slipped 3c to close at R1.20 yesterday.

Publisher: Business Report
Source: Max Gebhardt

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