| Thu 14 Aug 2003, 18:24 | | Decillion Limited - Interim Results Fro the Six Mo |
|
Decillion Limited - Interim Results For The Six Months Ended 30 June 2003
Release Date: 14/08/2003 17:30:02 Code(s): DEC
Decillion Limited - Interim Results For The Six Months Ended 30 June 2003
Decillion Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/011692/06)
Share code: DEC
ISIN: ZAE000017612
("Decillion" or "the company")
ANNOUNCEMENT OF INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2003
KEY FEATURES
* 27,8% increase in fully diluted headline earnings per share
* Funds under management grew by more than 20% in the last twelve months
* Disposal of offshore loss-making activities
* All divisions were profitable and ahead of the first half of last year
* Improvement in diversity and quality of income
FINANCIAL RATIOS
Unaudited Unaudited Audited
6 months 6 months 12 months
30 Jun 30 Jun 31 Dec
2003 2002 2002
Income statement:
- Net income before taxation R"m 22,0 18,1 25,1
- Headline earnings R"m 26,8 21,7 37,3
- Attributable earnings R"m 17,9 17,2 24,6
- Fully diluted headline EPS Cents 15,2 11,9 19,3
Fully diluted EPS Cents 10,2 9,4 12,7
Selected ratios:
- Return on average shareholders % 11,0 9,3 6,9
funds (annualised) % 76,6 86,2 88,1
- Cost to income ratio
Capital:
- Total share capital and reserves R"m 306,8 370,2 342,5
- Tangible share capital and reserves R"m 228,9 291,4 248,9
- Fully diluted tangible NAV per share Cents 132,0 157,8 135,6
Market capitalisation R"m 161,2 267,7 192,7
Share statistics:
- Share price cents 93 145 105
- Number of shares million 154,1 180,1 164,2
- Fully diluted number
of shares million 173,4 184,7 183,5
- Fully diluted weighted number
of shares million 176,5 182,1 193,9
Price earnings ratio (historical) times 6,9 6,6 8,3
FINANCIAL REVIEW
* Headline earnings increased by 23,9% to R26,8 million (2002: R21,7 million).
* Following the restructuring of the business all divisions have performed
better in comparison to the previous year. This resulted in net income before
discontinued operations increasing by 36,6% to R30,9 million (2002: R22,6
million).
* Operating expenses are well below that of the previous year, mainly as a
result of cost cutting, the impact of the exchange rate, the restructuring of
DCAF and the close down of Odyssey, hedge funds formerly managed in Switzerland
and the United Kingdom respectively.
* The interim results include a once-off AC133 adjustment to the balance sheet
of R26,2 million. The AC 133 adjustment resulted in a decrease of 14 cents to
tangible net asset value per share.
* The impact of the stronger Rand through the non-distributable reserves
resulted in a further 8 cents per share decrease, leaving a fully diluted net
tangible NAV as at 30 June 2003 of 132,0 cents per share compared to 135,6 cents
per share as at 31 December 2002.
SEGMENTAL ANALYSIS
Interim Interim Restated 12 months
(*) (*)
30 June 2003 30 June 2002 31 December 2002
R000" % R000" % R000" %
Capital markets 6 278 20,3 5 799 25,7 (4 288) (11,3)
Funds management 11 685 37,8 9 701 42,9 10 120 26,7
Corporate and institutional
finance 11 268 36,5 9 311 41,2 41 372 109,2
Head office and investments 1 651 5,4 (2 203) (9,8) (9 311) (24,6)
Net income before discontinued
operations 30 882 100,0 22 608 100,0 37 893 100,0
Onshore 13 177 42,7 27 580 122,0 29 811 78,7
Offshore 17 705 57,3 (4 972) (22,0) 8 082 21,3
Net income before discontinued
operations 30 882 100,0 22 608 100,0 37 893 100,0
(*) restated for new divisional structure
REVIEW OF OPERATIONS
Capital Markets
The Capital Markets division comprises all of the group"s trading and
securities distribution activities in the domestic and offshore markets. The
division contributed an operating profit of R6,3 million (2002: R5,8 million).
This is a particularly pleasing result considering the impact that market
uncertainty has recently had on the South African trading environment in which
the division operates.
The international broking business, especially the swaps area in Switzerland,
performed very well in the first half of the year. Together with the division"s
research-driven corporate sales, the execution services in Johannesburg and the
reduction in the offshore fund operation, these were the key factors in the
increase in profitability.
Proprietary trading capability is core to the division"s strategy of
managing, packaging and distributing market risk, including deals originated in
the group. Decillion"s ability to provide alternative liquidity to a somewhat
consolidated market has been welcomed by the banking community.
Funds Management
Funds Management is now reported inclusive of its related broking activities
and excludes the investment products unit now incorporated under Corporate and
Institutional Finance. The closure of a loss-making offshore fund has assisted
the division to increase its profitability, contributing an operating profit of
R11,7 million (2002: R9,7 million).
Big Rock Fund continues to be one of South Africa"s premier hedge funds. The
two other funds launched during the latter part of last year, namely the
Headland Fund (equity long/ short fund) and the Granite Fund (fixed income) are
continuing to attract assets under management. Total funds under management
have grown by more than 20% over the last twelve months. The Funds management
division has attracted a number of new clients during the period under review as
investors start to focus more on absolute returns.
All three funds performed positively during the period under review. The new
funds are now well established and there are further opportunities for new
product development. The division will be looking at the establishment of funds
in other markets towards the end of the year, with the intention of offshore
investment when exchange controls permit.
Corporate and Institutional Finance
Corporate and Institutional Finance comprises the deal originating units of
the group, which are focused on earning fee income from the arrangement of debt
and placing of such products with institutions or investors, having tailored the
products to suit the borrowers and investors specific needs. The division
contributed an operating profit of R11,3 million (2002: R9,3 million).
The team concluded eight transactions during the period, providing a wide
range of solutions including equity linked notes, capital guarantees, debt
raisings, placement of investment grade paper and derivative sales.
Head Office and Investments
Head office and investments contributed an operating profit of R1,7 million
(2002: R2,2 million loss).
The improved results are mainly as a result of savings in central
administration costs and the disposal of Decillion Solutions (Singapore based IT
business), which incurred a loss during the previous period. The business was
sold at its carrying value and no profit or loss was incurred with the sale.
AC 133 ADJUSTMENT
The introduction of AC 133 resulted in the group adopting a market quotation
base of measurement on its capital market trading portfolios. The difference of
R26,2 million between this measurement and the previous measurement basis is
adjusted against the opening balance of retained income in accordance with the
transitional provisions of AC133.
The income statement for the period includes the impact of the implementation
of AC133 on the trading portfolio since 31 December 2002.
PROSPECTS
The cost restructuring and business focusing initiatives undertaken at the
beginning of the year paid off during the period. Management is confident that
the business is well positioned to respond to opportunities going forward.
INCOME STATEMENT
6 MONTHS ENDED 30 JUNE 2003
Interim Interim Audited
6 Months to 6 Months to 12 Months to
30 Jun 03 30 Jun 02 31 Dec 02
R000"s R000"s R000"s
Revenue 197 977 215 185 447 438
Operating expenses (169 016) (195 301) (413 522)
Operating income 28 961 19 884 33 916
Net interest income 1 921 2 724 3 977
Net income before discontinued
operations 30 882 22 608 37 893
Discontinued operations and disposals - 2 112 -
Net income before goodwill and tax 30 882 24 720 37 893
Goodwill (8 901) (6 577) (12 777)
Net income before tax 21 981 18 143 25 116
Taxation (3 716) (955) (2 478)
Net income after tax 18 265 17 188 22 638
Attributable to outside shareholders (353) (3) 1 928
Attributable income 17 912 17 185 24 566
Headline earnings 26 813 21 650 37 343
Amortisation of goodwill (8 901) (6 577) (12 777)
Discontinued operations and disposals - 2 112 -
Net weighted number of shares in issue 157 174 177 520 174 498
Basic earnings per share (cents) 11.4 9.7 14.1
Net fully diluted weighted number
of shares 176 457 182 085 193 872
Fully diluted earnings per share (cents) 10.2 9.4 12.7
Fully diluted headline earnings
per share (cents) 15.2 11.9 19.3
BALANCE SHEET
AS AT 30 JUNE 2003
Interim Interim Audited
30 Jun 03 30 Jun 02 31 Dec 02
R000"s R000"s R000"s
ASSETS
Non-current assets 233 848 350 887 313 684
Investments 149 942 261 949 212 097
Fixed assets 6 022 10 108 7 988
Intangible assets 77 884 78 830 93 599
Current Assets 1 850 505 1 160 199 456 487
Cash 105 108 166 576 132 075
Tradeable securities 23 140 3 806 13 414
Accounts receivable 1 720 418 989 817 309 023
Taxation 1 839 - 1 975
2 084 353 1 511 086 770 171
LIABILITIES AND EQUITY
Non-current liabilities 100 176 65 199 96 029
Long-term liability 96 955 58 672 92 643
Deferred taxation 3 221 6 527 3 386
Current liabilities 1 675 814 1 075 561 331 188
Accounts payable 1 669 814 1 065 521 321 188
Bank overdraft 6 000 10 000 10 000
Taxation - 40 -
Capital and reserves
Share capital 1 537 1 801 1 642
Share premium 139 222 166 275 147 325
Non-distributable reserves (3 020) 28 653 11 883
Distributable reserves 169 041 173 512 181 603
Total shareholders funds 306 780 370 241 342 453
Outside shareholders" interest 1 583 85 501
308 363 370 326 342 954
2 084 353 1 511 086 770 171
Net actual number of
shares (`000) 154 091 180 088 164 197
Net asset value per
share (cents) 199.1 205.6 208.6
Tangible net asset value
per share (cents) 148.5 161.8 151.6
Net fully diluted number
of shares in issue (`000) 173 374 184 654 183 480
Fully diluted net asset
value per share (cents) 176.9 200.5 186.6
Fully diluted tangible net
asset value per share (cents) 132.0 157.8 135.6
CASH FLOW STATEMENT
6 MONTHS ENDED 30 JUNE 2003
Interim Interim Audited
6 Months to 6 Months to 12 Months to
30 Jun 03 30 Jun 02 31 Dec 02
R000"s R000"s R000"s
Operating income before interest 28 961 19 884 33 916
Elimination of non-cash items 1 146 5 360 21 932
(Increase) / decrease in working
capital (98 662) 11 877 (65 772)
Cash flows from operating activities (68 555) 37 121 (9 924)
Net interest received 1 921 2 724 3 977
Dividends paid (4 807) (2 375) (2 375)
Taxation paid (3 745) (4 246) (10 926)
Net cash (outflow) / inflow from
operating activities (75 186) 33 224 (19 248)
Cash flows from investing activities
(Additions) / disposals of fixed assets (227) 477 (3 343)
Disposals / (additions) to intangibles 6 410 - (18 665)
Disposals / (acquisition) of
investments 49 932 (4 548) 23 158
Profit on discontinued operation - 2 112 -
Net cash inflow / (outflow) from
investing activities 56 115 (1 959) 1 150
Cash flows from financing activities
Increase / (decrease) in long-term
liabilities 4 312 4 839 38 810
Treasury shares purchased (8 208) (3 463) (22 572)
Net cash (outflow) / inflow from
financing activities (3 896) 1 376 16 238
Net (decrease) / increase in cash
and cash equivalents (22 967) 32 641 (1 860)
Cash and cash equivalents at the
beginning of the period 122 075 123 935 123 935
Cash and cash equivalents at the
end of the period 99 108 156 576 122 075
STATEMENT OF CHANGES IN EQUITY
6 MONTHS ENDED 30 JUNE 2003
Interim Interim Audited
6 Months to 6 Months to 12 Months to
30 Jun 03 30 Jun 02 31 Dec 02
R000"s R000"s R000"s
Share capital
Opening balance 1 642 1 745 1 745
Shares issued net of expenses - 93 93
Treasury shares (105) (37) (196)
Closing balance 1 537 1 801 1 642
Share premium
Opening balance 147 325 161 753 161 753
Shares issued net of expenses - 7 948 7 948
Treasury shares (8 103) (3 426) (22 376)
Closing balance 139 222 166 275 147 325
Non-distributable reserves
Opening balance 11 883 34 512 34 512
Transfer (to) / from distributable
reserves (500) 1 210 500
Changes in reserves (14 403) (7 069) (23 129)
Closing balance (3 020) 28 653 11 883
Distributable reserves
Opening balance 181 603 167 872 167 872
AC 133 transitional adjustment (26 167) - -
Dividends paid (4 807) (2 294) (2 294)
Share capitalisation issue - (8 041) (8 041)
Transfer from / (to) non-distributable
reserves 500 (1 210) (500)
Net profit for the period 17 912 17 185 24 566
Closing balance 169 041 173 512 181 603
Total equity
Opening balance 342 453 365 882 365 882
Changes in equity (35 673) 4 359 (23 429)
Closing balance 306 780 370 241 342 453
ACCOUNTING POLICIES
* Accounting policies adopted for purposes of this interim reporting period
comply with South African Statements of Generally Accepted Accounting Practice
as well as with applicable legislation and are, apart from the implementation of
AC 133, consistent with those adopted in the prior financial year.
* Where necessary and appropriate, comparative figures have been restated to
conform with changes in presentation in the current period.
15 August 2003
By order of the Board
Directors: AJN Smit (CEO), TJ Davis, JF Marais*(Chairman), Dr M Mostert, Prof NI
Morgan*, AP Nkuna*, WF Spruyt*, SI Millman*, J Molobela*
(*non-executive)
Transfer Secretaries:
Computershare Limited, 70 Marshall Street, Johannesburg 2001 Registered office:
1st Floor, ABN AMRO House, No. 2 Exchange Square, 85 Maude Street, Sandton, 2196
Telephone: +27 (11) 217-9000 Facsimile: +27 (11) 883 0152
Company Secretary: Laurinda da Camara Company registration: Decillion Limited
(1998/011692/06)
Website address: http://www.decillion.net "
