| Mon 29 Jun 2009, 16:00 | | ELE - ElementOne - Reviewed condensed financial results for the year ended 31 |
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ELE
ELE
ELE - ElementOne - Reviewed condensed financial results for the year ended 31
March 2009
ElementOne Limited
(Formerly Avusa Limited, formerly Johnnic Communications Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1889/000352/06)
Share Code: ELE ISIN: ZAE000115887
("ElementOne" or "the Company")
REVIEWED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
Commentary
Background
Since reporting last year, neither the structure nor business of ElementOne has
changed. The company`s major investment remains its 33,6 per cent direct and
indirect interest in the listed Caxton and CTP Publishers and Printers Group
(Caxton) held through the following unchanged structure:
Direct investment in the listed Caxton and CTP Publishers and Printers Ltd of
16,18% and direct investments in Afmed (Pty) Ltd and Caxton Ltd, plus an
indirect investment in Caxton Ltd through Afmed (Pty) Ltd, resulting in an
indirect investment in the listed Caxton company of 17,42%.
In May 2008, with a buoyant stock market running, the company took the
opportunity to sell its remaining MTN shares realising a profit of R30 million
and generating cash of R165 million to assist settling the company`s legacy tax
obligations.
Financial results and position
For the year ended 31 March 2009 ElementOne`s revenue comprising income from
investments was R110 million compared to R167 million in the previous year.
Interest income decreased as a result of the large legacy tax payments amounting
to R302 million which became payable during the year and which saw a significant
decrease in the funds placed on deposit with our bankers.
With operating expenses well contained at R6 million (2008: R11 million), the
operating profit for 2009 was R104 million (2008: R156 million). Due to the
decline in the Caxton share price at 31 March 2009 we were required to book
through the income statement a negative non-cash fair value adjustment of R373
million (2008: positive R2 089 million) with the other exceptional item being
the profit of R30 million realised on the sale of MTN shares.
In regard to the tax charge, the negative fair value adjustment on investments
released R26 million from the deferred tax liability which was partially offset
by normal tax of R6 million and Capital Gains Tax of R16 million arising from
the sale of the MTN shares.
The resulting attributable and headline loss for 2009 was R235 million (2008:
profit of R4 979 million).
There was no change during 2009 in ElementOne`s direct or indirect stake in
Caxton. At year end the funds on hand were R127 million compared to R166
million.
The company is not represented on the boards of directors of Caxton, Afmed or
Caxton Ltd and does not form part of the Caxton controlling consortium. Its
indirect holdings in Caxton are historic in origin and date from the formation
and early history of the Caxton group in the 1970s and 1980s when the Argus
group of media and printing companies, from which the company ultimately
heralds, was a party to transactions involving the then Caxton group and its
founders.
Attempts by the company`s board ("board") to obtain copies of documentation,
including minute books and agreements that may relate to the founding of its
indirect and even direct interests in Caxton, have been unproductive.
These attempts have included a formal request to Afmed that the company be
provided with a copy of any shareholders` agreement that regulates the
relationship between the shareholders of Afmed or between the shareholders of
Afmed and Afmed itself. The formal response from Afmed has been that there is no
such agreement.
In recent public announcements such as for example in the 2008 annual report,
the board has told shareholders that as far as could be ascertained, and
therefore to the best of the board`s belief and knowledge, there were no written
agreements that govern the company`s shareholdings in Afmed or Caxton. It would
be evident from the above that this is still the position in that no such
agreements have been found by the board. However, during discussions with
representatives of the Caxton controlling consortium over the past nine months,
such representatives have alluded to the possible existence of agreements or
binding arrangements that govern the relationship between the Afmed shareholders
or that may impact on the company`s direct and indirect holding in Caxton. These
may possibly include rights of preemption over the company`s assets. Again the
board has not been able to (i) conclusively confirm the existence of such
agreements or arrangements, including to obtain copies thereof or (ii)
establish, if they exist indeed, what they may contain or how they may impact on
the company and its Caxton holdings. Efforts to resolve this conundrum are
ongoing.
The board`s objective is to extract maximum value for shareholders from the
company`s Caxton holdings. As such, and without operating assets of its own or a
controlling or joint controlling interest in Caxton, the company does not have a
reason to exist and the objective must be to either obtain a directly held
Caxton shareholding for its shareholders at full value, or to sell its Caxton
holdings at the best price obtainable and return the net proceeds to
shareholders.Discussions with the Caxton controllers aimed at bringing about
either outcome have so far come to nothing. The sticking point has been
differing views of relative values. In the absence of a common appreciation of
the value attributable to the company`s Caxton holdings, the board has come to
the conclusion that the continuation of the Afmed/Caxton structure in its
present form, is prejudicial to the company and its shareholders. The board is
considering the steps that may be available to it to deal with the Afmed/Caxton
structure in a manner which would be in the best interests of the company and
its shareholders. Shareholders will be advised of further developments if and
when this is appropriate through suitable announcements.
The company`s continuing failure to comply with JSE Listings Requirements means
that it is likely that its listing on the JSE Limited will terminate in due
course and in any event at the latest by the end of September 2009.
Whilst this is regrettable, it is inevitable and only serves to underscore the
need to resolve the issues that prevent the distribution of its assets at full
or even reasonable value to shareholders as soon as possible. Again the board
will inform shareholders timeously of developments on this front and the
arrangements post the delisting of the company, should this occur as expected.
Francois van der Merwe Colin Brayshaw
Director Director
For and on behalf of the board
Johannesburg
29 June 2009
Reviewed condensed financial results for the year ended 31 March 2009
Income statement
Note Reviewed Audited
2009 2008
for the year ended 31 March Rm Rm
Revenue from investments 2 110 167
Operating expenses (6) (11)
Profit from operations 104 156
Exceptional items (343) 5 479
Fair value adjustments of investments (373) 2 089
Profit on sale of investments 30 -
Profit on disposal of operations - 3 390
(Loss) profit before taxation (239) 5 635
Taxation 3 4 (656)
(Loss) profit for the year 4 (235) 4 979
Attributable (loss) earnings per
ordinary share (cents)
Basic and diluted (226) 4 796
Number of ordinary shares in issue
(`000)
At beginning and end of year 103 821 103 821
Weighted average for year (diluted) 103 821 103 821
Balance sheet
Reviewed Audited
2009 2008
as at 31 March Note Rm Rm
ASSETS
Non-current assets
Investments 5 1 790 2 163
Total non-current assets 1 790 2 163
Current assets 127 301
Investments held-for-sale - 135
Bank balances, deposits and cash 127 166
Total assets 1 917 2 464
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 10 10
Accumulated profits 1 766 2 001
Total equity 1 776 2 011
Non-current liabilities 108 134
Deferred taxation liability 108 134
Current liabilities 33 319
Trade and other payables 15 17
Taxation liabilities 18 302
Total equity and liabilities 1 917 2 464
Cash flow statement
Reviewed Audited
2009 2008
for the year ended 31 March Rm Rm
OPERATING ACTIVITIES
Cash flows from operations 104 156
Reduction in net current liabilities (2) (6)
Taxation paid (306) (228)
Net cash flows from operating activities (204) (78)
INVESTING ACTIVITIES
Acquisition of investments - (44)
Proceeds on disposal of investments 165 -
Disposal of interests in joint venture - 250
Net movement in shareholder loans - (439)
Net cash flows from investing activities 165 (233)
FINANCING ACTIVITIES
Dividend paid - (125)
Net cash flows from financing activities - (125)
Net decrease in cash and cash equivalents (39) (436)
Cash and cash equivalents at beginning of year 166 602
Cash and cash equivalents at end of year 127 166
Statement of changes in equity
for the year ended 31 March Share Share Accum- Total
capital premium ulated equity
Rm Rm profits Rm
Rm
Balance at 31 March 2007 10 796 1 048 1 854
Profit for the year 4 979 4 979
Dividends in specie (796) (3 901) (4 697)
Dividends on ordinary shares (125) (125)
Balance at 31 March 2008 10 - 2 001 2 011
Loss for the year (235) (235)
Balance at 31 March 2009 10 - 1 766 1 776
Notes
1. Presentation of financial statements
These reviewed condensed financial statements are presented in
South African rand since that is the functional and presentation
currency of the company.
These reviewed condensed financial statements have been prepared
using accounting policies consistent with those of the previous
year and compliant with International Financial Reporting Standards
(IFRS), IAS 34 Interim Financial Reporting, the JSE Limited`s
Listings Requirements and the South African Companies Act.
Reviewed Audited
2009 2008
for the year ended 31 March Rm Rm
2. Revenue from investments
Interest received - bank deposits 22 50
Dividends received 88 117
Joint ventures - 33
Investments 88 84
110 167
3. Taxation
Current taxation 22 531
South African normal taxation 6 14
Capital gains taxation 16 302
Secondary tax on companies - 215
Deferred taxation (26) 125
Current year (26) 130
Change in taxation rate - (5)
(4) 656
4. (Loss) earnings per ordinary share
The calculation of basic and diluted
attributable and headline (loss) earnings
per ordinary share is based on attributable
loss of R235 million (2008: earnings of R4
979 million) and headline loss of R235
million (2008: earnings of R1 589 million)
respectively, and on 103 821 159 (2008: 103
821 159) ordinary shares in issue.
Reconciliation between attributable and
headline earnings
Attributable earnings (235) 4 979
Profit on disposal of operations - (3 390)
Headline earnings (235) 1 589
Attributable (loss) earnings per share
Basic and diluted cents per share (226) 4 796
Headline (loss) earnings per share
Basic and diluted cents per share (226) 1 531
5. Investments
Non-current investments
Listed investments 861 1 040
Unlisted investments 929 1 123
Directors` valuation of investments 1 790 2 163
Valuation
The investment (direct and indirect
shareholding) in the listed Caxton is valued
with reference to the quoted market price at
the reporting date.
Rm
Market value of direct holding 861
Directors` valuation of indirect holding 929
1 790
A discount of 20% has been applied to the
see-through market value of the indirect
shareholding in the listed Caxton, which is
consistent with the discount the directors
applied to the directors` valuation in prior
years.
6. Capital expenditure commitments, contingent
liabilities and other commitments
The company does not have any capital
commitments, guarantees or other contingent
liabilities.
7. Reviewed results
The annual results for the year ended 31
March 2009 have been reviewed in terms of
the International Standard on Review
Engagements 2410 by the company`s auditors,
Deloitte & Touche. Their unmodified review
report is available for inspection at the
company`s registered office.
Directors
CB Brayshaw, WS Moutloatse, FJ van der Merwe, DJJ Vlok
Company secretary
Probity Business Services (Proprietary) Limited (011) 327 7146
Address
3rd Floor, JHI House, 11 Cradock Avenue, Rosebank, Johannesburg
Investor enquiries
Mr DJJ Vlok 082 551 4614
Date: 29/06/2009 16:00:01 Produced by the JSE SENS Department.
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